PEEK OF THE WEEK
December 27, 2017
Leif Hagen & Donna Roberts
The Markets
It’s time to turn
your mind to taxes.
Last week, President Trump signed tax reform,
officially titled ‘An Act to provide for reconciliation pursuant to titles II
and V of the concurrent resolution on the budget for fiscal year 2018,’ into
law.
The legislation provides significant
permanent tax cuts for businesses, including reducing the corporate tax rate
from 35 percent to 21 percent. Most individual taxpayers will also receive tax
benefits, including lower marginal tax rates. However, all of the individual
tax breaks will expire before 2026.
In addition, “…the standard deduction has
been raised from $6,350 for singles and $12,700 for couples filing jointly to
$12,000 and $24,000…With the standard deduction raised to $24,000, many folks
will take the standard deduction rather than itemize. Taxpayers itemize their
deductions when total deductions exceed the standard deduction,” wrote Barron’s.
The new rules won’t go into effect until next
year, and that gives you a small window of opportunity. If you act by the end
of the year, you may be able to minimize the amount you pay Uncle Sam. For example,
you may want to consider:
·
Deferring income until 2018, if possible, when ordinary
income tax rates may be lower
·
Accelerating 2018 planned charitable giving into 2017
·
Paying your January mortgage payment by December 31, 2017
as it includes interest for December
·
Consider prepaying real estate taxes due in the first
quarter and other state and local property taxes before December 31, 2017
·
Harvesting capital losses in taxable investment accounts
in 2017 and applying net capital losses against ordinary income in 2017 up to
$3,000
·
Waiting until January to send invoices for payments you
typically receive in December, if you are self-employed
One
problem with end-of-the-year tax reform is it leaves little time to act. Before
making any decisions or taking any actions, please consult with a tax or legal
advisor. This is not intended as legal or tax advice.
Data as of
12/22/17
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500 (Domestic
Stocks)
|
0.3%
|
19.9%
|
18.7%
|
8.9%
|
13.5%
|
6.0%
|
|
Dow Jones Global ex-U.S.
|
1.5
|
23.2
|
24.6
|
5.3
|
4.7
|
-0.2
|
|
10-year Treasury Note (Yield Only)
|
2.5
|
NA
|
2.6
|
2.2
|
1.8
|
4.2
|
|
Gold (per ounce)
|
1.1
|
9.4
|
12.1
|
2.0
|
-5.3
|
4.6
|
|
Bloomberg Commodity Index
|
2.0
|
-2.0
|
-0.7
|
-7.1
|
-9.2
|
-7.3
|
|
DJ Equity All REIT Total Return Index
|
-2.3
|
7.1
|
9.1
|
5.7
|
9.6
|
7.1
|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index
returns exclude reinvested dividends (gold does not pay a dividend) and the three-,
five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return
Index does include reinvested dividends and the three-, five-, and 10-year
returns are annualized; and the 10-year Treasury Note is simply the yield at
the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market
Association.
Past performance is no guarantee of future results. Indices are
unmanaged and cannot be invested into directly. N/A means not applicable.
Perhaps it’s best to use old newspaper
and string. Here’s something to keep in mind next holiday season when you get ready
to wrap gifts. If you have any doubts about whether your spouse will appreciate
the workout gear, your daughters-in-law will love the bathroom rugs, or your
adult son will value the hand-crocheted vest you made for his hunting dog, then
you should not wrap your gifts in beautiful paper and ribbons. Perhaps, you
shouldn’t wrap them at all!
Researchers from Yale and the University of
Miami recently reviewed the work of economists and psychologists who have
explored what produces lasting happiness and its implications for gift giving.
They also conducted some field trials. The findings were unexpected, as The Economist explains:
“Americans spend $3.2bn a year on wrapping
paper. Yet their work not only fails to enhance joy, it creates unrealistic
expectations that lead to discontent. Gift wrappers may think they are
transforming the mundane into the magnificent; recipients seem to experience
the process in reverse, with disappointment the result.”
It brings to mind
that old saying about putting lipstick on a pig.
Of course, few people select an undesirable
gift on purpose. The good news is that researchers can offer some insight into
gift giving, too. In general, there are two gifting strategies:
recipient-focused and giver-focused. If you rely on the former, you choose
gifts based on what the person you’re buying for likes. If you prefer the
latter, you give things you like.
It may seem counterintuitive but studies show
that, “You and the recipient will likely feel closer to one another if you buy
them a gift that says something about you, not them.”
Now, for the bad news: It’s not a definitive
solution. Researchers caution that giving a gift you like “could signal self-obsession
or narcissism.”
If you find the challenges of gift giving to
be too much, consider giving a nice IRA or a college fund.
Weekly Focus – Think About It
“We elves try
to stick to the four main food groups: candy, candy canes, candy corns, and
syrup.”
--Buddy, Main character in the movie Elf
Best Regards,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc.,
Member FINRA/SIPC.
P.S. Please feel free to forward this commentary
to family, friends, or colleagues.
P.S.S. Also,
please remind your friends and family members becoming Medicare eligible that
we offer Medicare insurance and Part D options with
NO COST to work with Leif as
their agent
For more information and resources visit our website at
www.HagenFN.com
* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* The Standard & Poor's
500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock
market in general. You cannot invest directly in this index.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees,
expenses, or sales charges.
Index performance is not indicative of the performance of any investment.
* The 10-year Treasury Note
represents debt owed by the United States Treasury to the public. Since the
U.S.
Government is seen as a
risk-free borrower, investors use the 10-year Treasury Note as a benchmark for
the long-term bond market.
* Gold represents the
afternoon gold price as reported by the London Bullion Market Association.
The gold price is set twice
daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in
U.S. dollars per fine troy ounce.
* The Bloomberg Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT
Total Return Index measures the total return performance of the equity
subcategory of the Real Estate Investment Trust (REIT) industry as calculated
by Dow Jones.
* Yahoo! Finance is the
source for any reference to the performance of an index between two specific
periods.
* Opinions expressed are
subject to change without notice and are not intended as investment advice or
to predict future performance.
* Economic forecasts set
forth may not develop as predicted and there can be no guarantee that
strategies promoted will be successful.
* Past performance does not
guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly
in an index.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
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Sources:
