Americans’ annual day of reckoning is here. Taxes, some say, represent the cost of living in a free society. Decades ago, as a young adult, I remember long lines at the U.S. Post Office in the waning hours of April 15, as taxpayers rushed to get a timely postmark on their Individual Income Tax Returns.
In some areas, temporary drop boxes were made available, which would be closed at midnight, at which time postal workers took the envelopes inside and postmarked them by hand with the April 15th date of arrival. These days, we mostly perform those functions on home computers, and let the computers’ operating systems acknowledge the delivery date over the Internet.
Americans fear the Internal Revenue Service (IRS) more than any other branch of government, and with good reason. Non-compliance with the 70,000+ page Tax Code leviathan leads to economic and social penalties. Knowing all the rules is virtually impossible, but the tax due date is clear.
Too many Americans perform their annual filing ritual in a last-minute (and often haphazard manner), and then forget all about taxes for nearly 12 full months. Many taxpayers “leave money on the table” due to a lack of attention.
The Tax Code is tweaked by Congress and the IRS so often that it averages out to about once every day. Significant changes are much less frequent, and in recent years have been largely favorable to taxpayers. Massive overhauls of the Tax Code include SECURE 1.0 and SECURE 2.0, as well as the One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cut Act. Taken together, most Americans have been granted tax reductions and opportunities for improved retirement savings.
Tax planning can save significant sums of hard-earned dollars, but most taxpayers don’t even know where to begin. Many taxpayers turn to their tax preparers for suggestions and receive mostly good advice. But preparers are not necessarily involved with the totality of their clients’ business and financial situations. Clients of Certified Financial Planners® (CFPs®) are often better served with Comprehensive Tax Planning (remember that we are not qualified tax preparers nor tax advisors, so we work with clients’ preparers).
Congress is well aware that they have been negligent on fiscal policy, resulting in a National Debt in excess of $39 Trillion (12 zeros). Despite this macroeconomic problem, Congress has long encouraged individual responsibility through tax-advantaged saving opportunities.
Taxes are here to stay, and failure to prepare for your future is unforgivable in the current economic environment. Excellent planning is readily available in conjunction with qualified financial advisors. We suggest a CFP® doing business as a Registered Investment Advisor (RIA).
From its low-profile introduction in 1997, the Roth IRA has become a behemoth among Americans’ savings and investment vehicles. Americans have more than $2 Trillion (12 zeroes) at the end of 2024 invested in Roth IRAs. Along the way, the Roth has added a cousin in the Roth 401(k). While not for everyone, the Roth concept has given a boost to savers in many situations.
Americans need to be responsible for their own economic futures. Sure, there is Social Security and Medicare, but try living on that package, and you’ll be disappointed and miserable. Social Security has never been able to support a decent retirement lifestyle, and was not designed for that purpose. Medicare doesn’t pay all your medical expenses, either. Everyone has a personal responsibility to supplement social program benefits with their own resources.
Opening a Roth IRA is easy, but first, you must have Earned Income in the year of the contribution. Earned Income consists only of money you receive for work, including wages, salaries, tips, commissions, bonuses, and net earnings from self-employment. Without Earned Income, no IRA contributions are allowed. If you do qualify but have not yet opened a Roth IRA, there are valid reasons for doing so, sooner rather than later.
Aside from offering tax-free growth and eventually tax-free income, Roth benefits are many and varied. Early withdrawals are tax-free for certain specific purposes, including first-time home purchases, disability, qualified higher education expenses, and several others. Starting the Roth IRA early allows your investment time to grow, eventually providing more funds for any of the exceptions, as well as for later retirement income.
Maximum flexibility and tax savings are available to Roth IRA owners once the account has been opened and funded (even with a small dollar amount) for at least 5 years. One year is credited for every calendar year in which the account holds contributed and/or earned dollars.
All contributed funds in a Roth IRA are available to the account owner at any time, for any reason. Those funds were already taxed prior to being contributed, and may be removed tax-free and without penalty.
Earnings and growth become available totally tax-free when the 5-year period has been reached, and the account owner has reached 59-1/2. Roth earnings and growth withdrawn from the account by someone under age 59-1/2 are subject to a 10% early withdrawal penalty. The above-mentioned exceptions to the penalty do apply to these qualified withdrawals.
For almost every saver, the benefits of Roth IRA ownership are best realized by reaching the 5-year period. Start early and get that clock ticking.
Becoming an employer is not everyone’s dream, but Americans are commonly entrepreneurial in spirit. Starting a business is part of both our capitalistic economic system, as well as our individual dreams. Many business startups fail, but an incredible number succeed, at least to some extent. Everyone starts small, but most successful startups eventually are able to hire people to handle daily chores in a growing business.
Becoming an employer changes a person in ways probably unanticipated prior to hiring anyone. Suddenly, a grave responsibility burdens the newly minted employer. While there are legal requirements for every new employer, there is also a moral calling and responsibility. The owner is suddenly charged with making payroll, and the financial weight of the new responsibility can be overwhelming. You can trust me, but ask any business owner how he or she feels about ongoing responsibility for employees’ paychecks.
Recognizing that a majority of Americans have never experienced the responsibility of making payroll, events of the past few weeks have presented a golden opportunity for me to discuss the concept. We hear frequent complaints from political candidates that their opponent has never signed the front of a paycheck. To many of us, that is a profound statement.
Sacrosanct is the word that comes to mind regarding making payroll. Business owners have a legal responsibility, but also a moral and ethical duty, to pay employees on time, and in the correct amount, every week.
When occasional bad times hit a business (inevitable for nearly every enterprise, large or small), the owner often must scramble to make payroll. The Number One responsibility of a business owner is to live up to the promise of compensating employees. If that means borrowing money personally, mortgaging the owner’s house, taking early withdrawals from Qualified Retirement Accounts, foregoing personal bill payments, or whatever, you do it.
Having a personal multi-decade family history of making payrolls, it is a frequent topic in our daily lives and business dealings. So, what’s triggering this conversation at this particular moment? Congress has “evolved” into an entity that appears to have overcome any sense of responsibility for making payroll for their hundreds of thousands of Federal Government employees. (Note that Congress gets paid no matter what, under a separate law.)
Even people who have never signed the front of a paycheck know what it would be like to not receive their earned compensation in a timely manner. Not providing government employees what they depend on, and are due, is unforgivable.
Last year (2025), our Stock Market suffered a dramatic pullback in April, then reversed quickly, and climbed up until year-end as if all had been forgotten. We appear to be somewhat ahead of that schedule in 2026, as world events have caused investors to go on a selling spree in March.
Israel and the United States decided that Iran had reached the end of its leash. Years of lying, deception, secrets, and threats pushed our powers that be over the edge. We are currently living through the process of punishing Iranian bad behavior by destroying their capabilities. We now know that Iran had tools of destruction beyond what they had heretofore acknowledged.
Two kinds of people (and their money) are in the stock market at any given time; investors and speculators. Speculators are frequent traders, attempting to “beat the market” with their insight and risk tolerance. True investors are people with their resources in the market for a minimum of 5 years. These people must live through volatility caused by the other group. Nothing we can do or say will change that relationship.
Long-term investors experience anxiety in tumultuous times. Imagine what speculators are going through as world events fly at them with little or no notice given. To me, the volatility often seems like a heart attack on a plate.
As financial advisors, our hardest days come when volatility jumps like a scared rabbit. Yet we know from training and experience that attempting to outsmart the market is a waste of time and money. And, most likely, it will take years off your life.
One old piece of market wisdom states that investors will feel the pain of a loss twice as much as they will feel the pleasure of a gain. Failing to contain those emotions is a costly mistake, a lesson learned primarily through experience. Good investor behavior is enhanced in many cases by following advice from a qualified and experienced financial advisor.
Words are well and good, but illustrations can be useful as well. In the past 12 months, the point range for the Dow-Jones Industrial Average (DJIA) ranged from 36,612 to 50,513, a spread of about 38%. How can any investor be expected to manage that variability through frequent trading?
Despite the range of ups and downs, calendar year 2025 produced a return on the DJIA of about 13%, and the S&P500 returned over 20%. These gains were earned by avoiding panic selling during down days and weeks.
Our markets have undergone frequent and harsh bad times for decades, so consider this. On Ronald Reagan’s inauguration date (January 20, 1981), the DJIA closed at 950, and recently the same index closed over 50,000. Despite many major setbacks, time in the market is still your best friend.
Watching the stock market erase recent portfolio gains is deeply frustrating, both for investors and advisors. When pullbacks occur, which they do frequently, investors become understandably concerned. When declines continue into the territory of Market Corrections (10% lower than recent highs), and occasionally into Bear Market Territory (20% retreat from recent highs), investors’ emotions can outweigh their logic and common sense.
However annoying and scary bad times become, riding out the storm is the safest process to follow. Unless, of course, your funds aren’t long-term investments with a time horizon of at least five years. Money exposed to extreme market volatility needs at least that amount of time to ameliorate risk.
Investors with dollars intended for near-term expenses or purchases need to find alternative, less volatile investment vehicles. Money Market Mutual Funds, ultra-short-term bond funds, Certificates of Deposit (CDs), and other lower-risk vehicles can protect principal while providing at least a modest return. Even yields below the rate of inflation are preferable to incurring short-term loss of needed principal through stock market volatility.
Human behavior is reasonably predictable, at least when large populations are being studied. During bad stock market years, there are observable trends. In prolonged downturns, selling activity accelerates among individual investors. As frustration grows, investors inch ever closer to making bad decisions. The final (and predictable) phase of a long, harsh down market is called Capitulation, and is observable when panic selling reaches its zenith. Many people simply take their ball and go home.
Predictably, shortly after Capitulation, institutional and other high-volume buyers emerge. Market recovery begins and quickly drives up prices, leaving shell-shocked investors behind. Watching reduced (and/or destroyed) account balances suspended in time, many investors will be afraid to re-enter the market until the recovery is mature. Assets sold during Capitulation are no longer recoverable at their selling prices, and the financial futures of many individuals and families suffer long-term impairment.
History and logic provide clear guidelines for long-term investing success. Unfortunately, human emotions run the gamut in stressful market conditions. In our financial advising business, we have been faced with pullbacks, corrections, and Bear Markets. Our job is to control panic activity (if possible).
Clients of qualified advisors tend to avoid Capitulation, though a degree of frustration is unavoidable. We can help avoid Capitulation disaster.
For several recent weeks, the stock market has been rather docile, with few outsized gains or losses. That pattern was suddenly broken in response to military action occurring far from home. While Iranians were asleep at the wheel, and Israel was on high alert, on a recent Saturday morning, we (jointly with Israel) decimated layers of Iranian “leadership.”
Financial markets detest uncertainty, and nothing projects uncertainty better than huge black clouds billowing upward where occupied buildings stood scant minutes before. Black smoke columns became especially evident on the otherwise cloudless horizon when recent attacks in Iran took place. The carefully timed (I believe) Saturday attack minimized reaction on our Stock Exchanges. Fortunately, traders did not “freak out,” and the first two trading sessions revealed very little panic selling. In fact, Wednesday turned in a solid green market performance and appeared to set the table for a minimal weekly decline. Thursday and Friday did produce a mild sell-off, and major market indices were down modestly for the week.
Where we go from here is anybody’s guess, and I expect more volatility. For frequent traders, there is money to be made during volatile times, but those frequent traders have to be correct in stock picking and timing.
For long-term investors, history tells us that patience is a virtue. There is more to riding out volatile times than merely “buy and hold.” We leave the speculators to trade their individual stock choices in a rough market. Our game plan is (always) to diversify, diversify, diversify. Rather than making bets on individual stocks, we prefer holding Exchange-Traded Funds (ETFs), mutual funds, Sector Funds, and index shares.
Thoroughly diversified portfolios are certain to include market losers in tumultuous times, but in the mix of shares will be winners as well. We want to own the winners, without having to determine (guess) which issues will become new Wall Street darlings. We diversify holdings to avoid having to guess.
Some investors look at a diversified portfolio as “going nowhere.” Some parts up, others down, and overall, results can often be relatively boring. We know that minimizing losses during volatile periods in the market makes the inevitable recovery period more profitable. Diversifying our portfolios provides a measure of stability during down and/or uncertain times.
Volatility is likely to remain high until a true settlement is reached in the Middle East. Since that day is unpredictable (at best), we’ll handle the ups and downs by exercising the fundamental principle of diversifying assets. This, too, will pass, preferably sooner rather than later. Good times will return, and we’ll be ready for the inevitable rising tide in our markets.
Thinking about hiring a financial advisor, but concerned about the cost? You are not alone. I find it perfectly rational to consider price of any service provider. Nothing wrong with demanding value for our hard-earned dollars, and especially so in this expensive post-inflationary environment.
We all perform cost/benefit studies multiple times monthly. Spending options, especially for non-essentials, must be carefully considered, as our resources are limited. We all desire the best value that fits our needs and wants, but that is not always easy to discern.
Services are generally more difficult to evaluate than products. Purchasing a product generally means what you see is what you get. Not so much for services, where results can’t be determined until after the money is pledged and the service is performed.
Contracting for financial services can seem like a leap of faith. Investors face a slew of possibilities for their discretionary dollars, whether for products or services. Products are largely insurance policies, including annuities and life insurance. Services include planning, portfolio creation and management, tax form preparation (use only qualified professionals), etc. Investors are only able to evaluate their purchases once results become evident.
Choosing a financial advisor from the murky sea of providers can be overwhelming. Finding an advisor who is a good match for your needs can often be accomplished with the assistance of various free online resources. Among them are SmartAsset.com, letsmakeaplan.org, and NAPFA.org. These websites assist investors in locating a fee-only, fiduciary financial planning professional. We suggest finding a qualified advisor who operates as a Registered Investment Advisor (RIA), such as Strivus Wealth Partners.
When choosing an advisor, the gold standard among financial advisors is the Certified Financial Planner® (CFP®) designation. Controlled by the CFP Board®, which sponsors the letsmakeaplan.org website, members’ certifications assure investors that the advisor will place their clients’ interests ahead of his or her own (required of every true fiduciary).
Similarly, NAPFA (National Association of Personal Financial Advisors) assures that members remain unbiased, so they do not sell commissioned products. SmartAsset is a private company, founded to assist investors searching for a qualified professional advisor. Their website includes a free calculator for an individual’s probable success after choosing a qualified advisor.
Recent long-term studies have determined that using a qualified advisor results in 2% to 3% higher annual investment returns (after fees). Talk to us about the actual value of our services.
Last week, we covered new and evolving trends in financial markets, including changes investors should embrace when market preferences shift. As financial advisors, we equally discourage excessive trading and static “buy and hold” portfolio neglect. Both carry “opportunity costs” and may result in leaving money on the table.
However, staying true to a predetermined portfolio design does not mean it has to remain stagnant. Planning and performing substitutions among and between asset classes according to developing investor preferences, over a long investment horizon, can bolster the creation of wealth.
Fortunately for everyone (including us), many investors rely on financial advisors to monitor trends and provide information. Our main mouthpiece is the Van Wie Financial Hour radio program, which provides us a weekly platform to share what we are witnessing in markets.
Live radio also affords the public an opportunity to comment and question in real time, using the telephone lines that are provided at no cost to listeners. Since the beginnings of the Van Wie Financial Hour in 2015, our policy has been to prioritize callers ahead of our own discussions. We also provide answers to questions submitted via email or text to Strivus Wealth Partners, the owner and sponsor of the show.
For many months, shifting preferences have been especially evident in the Technology Sector. While there is no one date where Artificial Intelligence (AI) became available to the public, the major event that changed market preferences was the launch of ChatGPT in 2022. Unsurprisingly, AI’s accessibility was met with guarded, but significant, optimism. With increased usage, demand for semiconductors (“chips”) exploded, driving growth among big chip manufacturers, including Nvidia (NVDA) and Taiwan Semiconductor (TSM). Their stock prices soared. Until they didn’t.
NVDA’s stock fell sharply in a short time, and that volatility upset many investors. Far too many stockholders had bought into the steep rise, and some bailed out when the sudden decline became a pattern. These people were chasing returns. Many lost significant value by purchasing a hot stock, followed by making panic sells well into the decline. Buy high, sell low = bad idea.
An offshoot of the AI craze has been rising popularity for the Utilities Sector, as demand for electricity has created opportunities. Increasing portfolio allocations to participate in this growth industry has been rewarding.
Several studies (some still ongoing) are revealing that long-term investment results increase with a competent advisor, adding about 2% to 3% average annual returns. Diligence is often its own reward, and we can help.
Market Sector Rotation is happening now. Every so often, investor preferences undergo a seismic shift. What’s hot tomorrow can be a far cry from what was hot yesterday. We’re not talking about selling “Company A” stock to buy “Company B” stock. As investment managers, we seldom get involved with individual stock issues. The market is just too fickle to predict with any confidence the coming success of any individual company stock.
The huge (worldwide) stock markets are divided into numerous sectors. At any moment, some sectors are coveted by investors, and lively buying causes increasing stock prices. At the same time, out-of-favor sectors experience heavy selling, and stock prices trend lower. These preferences are not fixed, but change over time, causing Sector Rotation to occur.
For an example of shifting preferences and sector rotation, Technology is one of the best and most dramatic examples. Investors have experienced several decades of love/hate relationships with Technology. In the 1990s, the newly available Internet created demand for Technology stocks. The NASDAQ Composite Index (where many Tech Companies’ stocks are listed) rose from the low 400 range to 5,048 in March of 2000.
When the “Dot-Com Bubble” burst in March of 2000, rotation out of Technology began. By September of 2002, the NASDAQ Index fell to under 1,150. An unbelievable 15 years later (2017), the NASDAQ Index reached a new high closing value, and the popularity of Technology soared. For a while, anyway.
Bonds exhibit another classic example. Following a solid performance in 2020 (+7.5% Aggregate Bond Index change), performance for the next 2 years was negative, -1.5% and -13.0%, respectively. Many investors and advisors dramatically reduced their portfolios’ bond component, rotating into other, more popular, sectors of the market, including Money Market Funds.
In recent years, Money Market mutual funds have become popular due to rising interest rates. Low risk with relatively high returns can’t last forever, and sure enough, rates have begun to fall. Money Market investors are rotating out, again finding favor in the Bond Sector.
Today’s portfolios are experiencing Sector Rotation, as Technology, Money Markets, and other sectors are losing favor, while Industrials, Materials, and International Stocks are among those gathering interest. Multitudes of buyers are causing rising stock prices in these and other preferred sectors.
Watching and understanding national trends enables investors to implement Sector Rotation while maintaining overall portfolio balance and diversification. We can help. Each and every Saturday, we relate the latest news in sector preference shifts during the Van Wie Financial Hour on WBOB radio.
April 15th is approaching quickly, and 2025 income tax reporting documents are being retrieved from mailboxes and websites everywhere. Every taxpayer is responsible for amassing all pertinent documents required to prepare annual Form 1040 (Individual Income Tax Return) on or before that date (or the automatic extension to October 15, available to individuals merely for the asking). Any tax underpayment is absolutely due by April 15.
Whether a taxpayer is using a professional tax preparer or using one of the many D.I.Y. software applications, completeness and accuracy are critical. Understanding what information is needed, and knowing when to expect delivery of necessary forms is critical to avoiding making a premature filing. Filing without complete data can result in a necessary refiling, or even worse, an audit. Rushing to file in order to get a refund is not wise, and may result in unexpected paperwork, fines, and/or interest charges.
Forms W-2 (for employees with paychecks and tax withholding) and 1099 (for self-employed people, contractors, and “gig workers”) should have already been delivered, as the due date was February 2 this year. Corrections requiring new paperwork are rare, but can happen. Delaying a tax filing for that possibility is unimportant, unless the taxpayer is aware of an error on the original form.
Investors will need to await annual statements for their (non-retirement) taxable accounts. Interest and dividends received, as well as short-term and long-term capital gains, will be itemized on an annual Composite 1099 and Year-End Summary. Late February is typical for receipt of these informational forms, though they may be amended later. Rushing to file may wind up requiring an amended filing.
Individuals with IRAs (Individual Retirement Accounts) should receive a Form 5498 if any funds were placed into the IRA. This includes contributions, Rollovers, and “Trustee-to-Trustee Transfers.” The 5498 will arrive in May, and should be kept and preserved, but not filed with the 1040. IRS receives copies of all your required paperwork.
Fewer taxpayers are itemizing tax deductions since the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). That does not provide taxpayers with an excuse to jump the gun by filing before all paperwork is in place. Know what to expect and confirm each document’s veracity before filing.
Most people file electronically, but if you are mailing it in, don’t wait until April 15 and assume the U.S. Postal Service will date-stamp it on time. Add at least one “safety day,” and you will avoid a possible late fee.
Better safe than sorry when dealing with the IRS (and the USPS).