People seem to believe that whatever has been going on for a while will continue that way forever. Bull markets will never end, and bear markets will go on indefinitely.
We know that is not true but that is not the way it feels. The sun, however, will come out again. Yes, this time too. The key is to plan for the winter during high summer and look forward to warmer days during the cold.
There is an old saying, "Truth will out." It means that the truth will eventually be revealed. We have learned a lot recently about the possible origin of Covid 19, the rationale of the ensuing lock-downs, and the lengths to which politicians, the media, and governmental organizations assumed things that turned out to be less than accurate. Worse, they sometimes labeled what turned out to be reliable information as "disinformation" and often pilloried the people providing it.
"I ain't mad" as the younger folks sometimes say. I assume they did what they thought best, at that time.
I also understand, as you should, that even very intelligent people do not always arrive at their beliefs based on facts. Rather, they form their opinions in advance based on things like incomplete information and what they wish were true and accept new data only if it supports their preconceptions.
The terms government, media, and politicians are just abstractions. They are words for groups of people who play a particular role in society. And people, all people, are imperfect and subject to the behavior shaping forces of desire, incentives, and constraints.
It is up to us to be informed and do our best to see the world as it is, not how we would like it to be. I believe this will lead to better decision making over time. If more people make better decisions, more frequently, we and society writ large should prosper.
Speaking of Covid lock-downs...does anyone watch award shows anymore? According to the ratings, it does not appear so.
Actors make obscene amounts of money pretending to be us. That is, real people who go to work every day and do important jobs. A bit galling though, is celebrities’ tendency to have strong and vocal opinions about what we all should believe. I say God bless them their success but give me a break.
One excellent thing about the lock-downs is that it placed in sharp relief how critical some professions are and how much we depend on our unsung heroes. Many, though not all of them, in so-called blue-collar fields.
Maybe Hollywood should say thank you by putting on an award show for the subjects of their content and the folks we really cannot live without. Doctors, nurses, teachers, electricians, plumbers, police officers, firefighters, engineers, construction workers, sanitation workers, truck drivers, private business owners, etc, etc. Maybe if they did, people would watch.
Has it ever occurred to anyone that if the government wanted to solve our tax problems they could do so- by not taxing us! Instead, we are given tax deferred investment vehicles like 401K and IRAs and encouraged to be grateful.*
Several years back, Time Magazine ran a cover story lambasting the 401K calling it a “rotten repository for American savings” and “an abject failure.” It is important to note that this came after the stock market crash of 2008/2009 so perhaps they spoke a bit emotionally.
Still, tax deferred savings programs like 401Ks and IRAs might not be tax savings but rather, tax postponements. In my nearly three decades of experience, the more money a person makes or has, the less likely they are to be in a lower tax bracket when they retire. This is especially true of successful business owners who can choose to take more time off later in life, instead of retiring outright.
And that assumes tax rates remain the same. With over 30 trillion in national debt and a 2 trillion-dollar annual budget overhang, that is not an assumption I am prepared to make.
I am not against tax deferred plans. Saving is good and investing has certainly been good historically. However, there are tax efficient alternatives that are worth learning about.
We all know that broken New Year's resolutions are nearly as common as the resolutions themselves. This used to discourage me but now I take a very different view. Perhaps, it is maturity.
I made a number of resolutions at this time last year. I achieved a few of them and fell short on others. But I achieved a few of them! That is something to be happy about and I am. I have learned to give myself permission to be imperfect. It is liberating.
Let us make our resolutions and do our level best to meet or exceed them. Resolutions are, almost by definition, desirable and important, but also challenging. That is mostly why they remain goals instead of already being accomplishments. So, even if you only kept a single resolution in 2022, or if you kept it but imperfectly, that is one more improvement in your life. And you should be proud of that.
If you have financial goals for 2023, consider working with a financial professional who can assist you in turning your resolution into reality.
From my family to yours, we wish you a wonderful, healthy, and prosperous 2023.
Happy New Year!
*“Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.”
Scott R. McGimpsey December 29th , 2022
This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Neither Cetera Advisor Networks LLC nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm.