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Wishing You Happy Holidays From Our Team!

By Jeff Gilbert

Season’s Greetings from all of us at Balboa Wealth Partners! This year has been filled with its share of challenges and triumphs, and through it all, we’ve been honored to serve clients like you. Your trust means the world to us, and we’re dedicated to building confidence and stability in your financial future. As you celebrate this holiday season, know that we’re here to support you every step of the way. 

Reflecting on 2024

As we give thanks and warm wishes and celebrate the start of the new year, it’s important to reflect on all that we’ve achieved this year. It wasn’t always easy, but we have weathered the storms and are stronger for it.

Amid the challenges, we also faced a profound loss with the passing of our beloved colleague Alex Aretakis in April. Alex’s dedication, humor, and care for his clients left an indelible mark on our team and all who had the privilege of knowing him. As we continue to honor his memory, we are reminded of the importance of resilience and the strength we find in our shared purpose.

While inflation, continued stock market volatility, and recession concerns remain on the horizon, we approach 2025 with renewed determination and optimism.

Whether or not you are glad to see this year go, take time to reflect on all that it has brought and the good things that have come from every victory and trial.

Looking Forward to 2025

We hope you are excited for everything the new year will bring, and we encourage you to think about what you want 2025 to hold for you. The end of the year is a great time to set new goals, dream about the future, and find renewed motivation. Use this season to recharge your batteries and create a vision for the coming year so that you can hit the ground running in January. Enjoy some well-deserved rest and get excited for the new year!

Thank You for a Wonderful Year!

Everything our team at Balboa Wealth Partners achieves as a firm is all due to you. Your loyalty brings new clients to our doors, and your trust helps us build strong relationships that last a lifetime. We hope that in serving you, we have provided your family comfort in knowing that we are here to help whenever you have questions or concerns. We understand that life changes can happen at any moment, and we want you to rest easy knowing that when you need advice, guidance, or simply someone who will listen, we’re here for you.

As we prepare to enter a new year, we look forward to continuing to help you pursue your financial goals in 2025. Here’s wishing you joy and laughter during the holiday season and a happy new year!

Get in Touch

As the year comes to a close, now is the perfect time to review your financial plan and set yourself up for a successful 2025 and beyond. Give me a call at 949-445-1465 or email me at [email protected].

Scottsdale office: 480-801-5010, [email protected]

Happy Holidays from our team to you and yours!

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Estate Planning: Why It’s Essential at any Age

By Jeff Gilbert

Ever wondered if estate planning is just for the wealthy or those in their golden years? It’s not at all! Whether you’re just starting your career in your 20s or enjoying the quiet of retirement, estate planning is important for everyone.

Yet, according to a 2024 survey, only 32% of Americans have formal estate plans, leaving most people without a clear say in their end-of-life decisions. This often means someone else—or even the State—will make those choices. In this article, we dive into why estate planning is a smart and necessary step no matter where you are in life.

Starting Out: In Your 20s and 30s

Feeling invincible? We all do when we’re just starting out! These early years are when you least expect to need an estate plan, which is exactly why it’s a critical time to have one. Early estate planning helps clarify your wishes—however straightforward they may be at this stage—so they are clear and actionable.

Take Stock of Your Finances: Create a list of bank accounts, investments, real estate, and any other valuable assets. This first step helps you organize your financial life, right from the start.

Create a Will: It’s important to recognize that it’s not necessarily about the size of your estate but about making your wishes known. A well-drafted Will helps outline exactly how you want your assets distributed after your passing, and is a great way to look after your family if you can’t be there—especially if you have minor children. 

Consider a Durable Power of Attorney (POA) and Healthcare Proxy: Unexpected events don’t wait until you’re older. Establishing a POA and healthcare proxy early allows you to designate someone you trust to handle your affairs if you can’t. A POA specifically authorizes this individual to manage your financial and legal matters, while a healthcare proxy empowers them to make medical decisions on your behalf.

Set Up a Living Will: This document helps you lay out your wishes for medical intervention—a crucial piece if you’re unable to communicate those decisions yourself.

Building and Growing: In Your 40s and 50s

By the time you hit these middle years, life’s gotten a whole lot richer—both in terms of assets and complexity. Maybe you have kids, your dream home, or a thriving career. This stage is full of both financial and family growth, which makes it a great time to reassess and reinforce your estate plan.

Life Insurance Check-up: A key consideration for any estate plan, life insurance offers a safety net for your family that can help support them in your absence. But as your life evolves, so do your life insurance needs. That’s why it’s essential to reevaluate whether your coverage reflects your current situation. 

Consider a Trust: Beyond a Will, a Trust is another way to manage and safeguard your growing assets. And despite what you may have heard, Trusts aren’t just for the wealthy. They are legal arrangements that allow for control over asset distribution, often avoiding probate and addressing specific wishes in estate planning. 

Update Your Beneficiaries: Life changes—and so should your estate plan. Make sure the beneficiaries listed on your Will, insurance policies, investment accounts, and retirement accounts match your current wishes. Here’s one more thing to consider: it’s a good idea to review your beneficiary designations and Will at least every three years, or whenever you experience major life changes like marriage, divorce, the arrival of a new baby or grandchild, retirement, or a significant health event.

Pre-Retirement: Sharpening Focus in Your 60s

On the brink of retirement, now’s the perfect time to fine-tune your estate plan. The decisions you make now can significantly impact your legacy and retirement years, so it’s important to focus on strategies that reflect your upcoming lifestyle changes and the influence you want to have.

Advanced Trust Planning: Strategies like Charitable Remainder Trusts or Irrevocable Life Insurance Trusts can help you extend your legacy far beyond your lifetime. These sophisticated tools are capable of far more than just reducing taxes—they offer you the opportunity to support the causes close to your heart in a significant and enduring way.

Business Succession Planning: If you’re a business owner, what’s your exit strategy? Including a clear succession plan or buy-sell agreement in your estate plan is vital for your business’s continuity. A well-drafted and funded buy-sell agreement supports smooth transitions, helping to manage disruptions or financial difficulties when you leave. Plus, it can also provide for your family financially if you pass away or cannot work. Without such planning, your business could pass to heirs who are unable or unwilling to operate it, leaving your business legacy at risk.

Tax Strategies: With a substantial estate, it’s critical to engage in tax planning to effectively transfer wealth to your heirs—and not to the IRS. This includes several strategies, like setting up Trusts, making charitable gifts, and gifting assets during your lifetime. Each of these is designed to reduce your estate’s tax burden while helping you fulfill your legacy goals.

Your Enduring Legacy: Retirement and Beyond 

By this stage, many people are tempted to think they’re done planning. But retirement isn’t the finish line for estate planning. In fact, it’s a pivotal time for maintaining, updating, and shaping the legacy you’ll leave behind.

Estate Review: Regular reviews with your estate planning team can provide confidence that your plan will remain effective. Changes in laws, financial circumstances, or even family dynamics can all impact your estate plan, so checking in regularly helps keep it current.

Charitable Giving: What is the vision for the wealth you’ve built? For most people, leaving a legacy isn’t just about assets, it’s about making a difference. If this sounds like you, consider how charitable giving fits into your estate plan.

Gift Wisely: Gifting assets during your lifetime allows you to take advantage of the gift tax exclusion, potentially reducing the overall estate tax burden. Typically, you can give gifts up to a certain limit (determined annually) to as many people as you like without affecting the lifetime gift exemption amount. Plus, this lets you witness the impact of your generosity firsthand. 

Prepare for Tomorrow, Starting Now

Your estate plan goes beyond paperwork—it’s a representation of your hard work and the principles you hold dear. As life evolves, so too should your estate planning strategy, adapting to each new phase.

Whether you’re in the early stages of wealth building or preparing to pass on your legacy, the steps you take today can greatly impact the future. At Balboa Wealth Partners, we’re committed to helping you navigate every stage of the journey.

For customized guidance and to create an estate plan tailored to your unique needs, contact us at 949-445-1465 or email me at [email protected].

Scottsdale office: 480-801-5010, [email protected]

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Why It’s Important to Have a Fiduciary Financial Advisor

By Jeff Gilbert

The financial world is full of various titles: financial advisor, financial planner, wealth manager, and more. Choosing the right advisor who provides honest, reliable advice and helps you meet your goals can be challenging. So, how can you make an informed choice?

A title alone doesn’t reveal the advisor’s standards or how they operate, which can be confusing and frustrating. Instead of focusing on job titles, ask your current or potential advisor if they adhere to the fiduciary standard. Their response will show whether they are genuinely committed to acting in your best interest.

What Do These Different Titles Mean?

If you’ve ever researched financial advisors, you may have noticed there are many different types of advisors from which to choose. Some of the most common types of financial advisors are brokers, fee-only fiduciaries, and independent financial advisors. It’s important to know the standards each type of advisor is held to as you’re deciding who to hire.

Here’s the breakdown:

  • Brokers manage your portfolio but also sell financial products such as mutual funds or insurance policies, for which they earn a commission. They are not held to a fiduciary standard, so they may not always act in your best interest.
  • Fee-only fiduciaries may charge a flat fee, or a percentage of your portfolio, but they are always held to a fiduciary standard, in which they are required to act in your best interest.
  • Independent financial advisors have started their own financial firm. Most independent advisors act as fee-only fiduciaries, but some may act as fee-based advisors and sell additional financial products on a commission basis.

What Exactly Is a Fiduciary?

In general terms, a fiduciary is a person or entity who has the power to act for another in situations that require complete trust. When it comes to the financial industry, financial advisors who work for a Registered Investment Advisor firm must always act as a fiduciary for their clients. CERTIFIED FINANCIAL PLANNER® professionals are also held to this duty when providing financial advice to their clients. By law, a fiduciary advisor must be completely transparent and always act in their clients’ best interest. They are also obligated to avoid and disclose any potential conflicts of interest.

Additionally, the ongoing services and investment monitoring they provide also falls under the fiduciary duty. In other words, their job doesn’t end after the initial meeting or purchase. They must regularly review your accounts to help align your investments with your best interest.

There are financial professionals whose services do not fall under the fiduciary standard. This doesn’t mean that they are out to steal your money and can never be trusted—far from it. These financial professionals who register with FINRA are held to a standard known as Regulation Best Interest (Reg BI). This is a step in the right direction, but doesn’t take things as far as the fiduciary standard for Financial Advisors who work for a Registered Investment Advisor firm that registers directly with the Securities and Exchange Commission.  

What Does it Mean to Work With a Fiduciary?

There are several benefits to working with an advisor who serves in a fiduciary capacity. For one, they are open and transparent. Aside from the obvious goal of maximizing value for your money, working with a fiduciary can give you confidence that your advisor is working in your best interests rather than their own. They’ll give you their true, professional opinion (even if it’s not the answer you want to hear). This is extremely valuable when you’re facing a big life decision, whether it’s purchasing a second home, transitioning into consulting work, or retiring earlier than anticipated. Reviewing your entire financial picture, an advisor can show you the impact a decision may have on your future and how you can pursue certain goals.

By working with an advisor who holds to the fiduciary standard, you can be confident in your financial future. Clients have the power to ask questions and to demand the highest value for the service that advisors are providing. As a Registered Investment Advisor firm, we understand people’s reservations or even negative connotations toward the underlying motivations of some advisors. We want to assure you that you can trust in the fact that our relationship with you is built on integrity and putting your interests above our own.

A Holistic Approach

Independent, fiduciary advisors do so much more than just pick your stocks. Working with an experienced financial specialist can be a realistic sounding board to help provide you with a litmus test when you have questions or face a big financial decision. They actively coordinate the accumulation, distribution, and transfer of your wealth, as well as the estate, tax, and financial planning areas of your retirement plan. An advisor who looks at the big picture of your financial life can help you optimize income and mitigate taxes in retirement. 

For example, this type of advisor helps you create a retirement income plan that strategizes when you take your withdrawals and what accounts you take them from first; not to mention, they also design a Social Security strategy that optimizes your benefits, manages Medicare confiscation, and addresses long-term care so you can feel confident that you’re on the right track as you pursue your long-term goals. The objective advice of an independent fiduciary advisor can make an incredible impact on your financial situation in retirement. 

Is a Fiduciary Essential for My Financial Plan?

If you want to make confident, informed decisions about your finances, the answer is yes.

At Balboa Wealth Partners, our focus is on building strong portfolio performance while offering personalized solutions tailored to your financial goals. As an independent firm, we are not tied to any commissions or specific investment products. This means we select investments based on your unique risk tolerance, circumstances, and objectives, rather than our own interests.

To begin, give me a call at 949-445-1465 or email me at [email protected].

Scottsdale office: 480-801-5010, [email protected]

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

How to Navigate Taxes When Your Monthly Income Varies

By Jeff Gilbert

Most people typically think about taxes once in a calendar year. When taxes are automatically estimated and deducted from their paycheck, all they do is file their tax return in April. However, if you are self-employed or in a profession with a fluctuating income, managing your taxes is a bit more complex.

To help increase your irregular income, proactive tax management is essential to incorporate into your financial plan. Here are five steps you can take to manage and reduce your tax liability while dealing with a variable monthly income.

1. Understand When Estimated Tax Payments Are Due

Self-employed individuals and entrepreneurs are responsible for paying taxes directly to the IRS in the form of quarterly estimated payments. Being your own boss means you have to calculate and remit payment for what you owe; it’s not automatically deducted from your paycheck like it is for W-2 employees. 

This is great in that you don’t have to pay taxes right away, but it can quickly become an administrative and financial burden if you don’t stay on top of it. 

To better manage your tax payments, you must first understand when they are due. This table highlights the typical due dates for quarterly estimated tax payments: 

Taxes are due on… …for money earned…
April 15 January 1 – March 31
June 15 April 1 – May 31
September 15 June 1 – August 31
January 15 of the following year September 1 – December 31 

Failure to pay your estimated taxes or late payment may result in hefty penalties and fees charged by the IRS, so it’s critical to stay on top of these dates.

2. Understand How Much You Should Pay

Understanding how much you should pay in taxes can be especially difficult if your income fluctuates each year. If you overpay, you run the risk of giving the IRS an interest-free loan, and if you underpay, you run the risk of being penalized. In this case, the safest thing to do is to avoid the underpayment penalty by paying the lesser of the following:

  1. 90% of your current year tax liability or
  2. 100% of your prior year tax liability (if your adjusted gross income for the prior year was more than $150,000, then you must pay 110% of your prior tax liability)

Keep in mind that the IRS also provides a stipulation if you receive uneven income throughout the year. You may be able to reduce or avoid penalties by annualizing your income and making unequal payments throughout the year.

3. Create a Tax Plan

After you determine how much tax you should pay, the next step is to create a tax plan to ensure you save the appropriate amount. The general rule of thumb is for self-employed individuals to set aside 25-30% of their income for taxes, but the exact amount you need to set aside depends on your business structure, tax bracket, state of residency, and more. 

For individuals with irregular income, it’s important to adjust your savings as your income fluctuates. If you have a particularly successful month, consider putting 50-60% away to make up for months where your income is lower. Working with a wealth manager or utilizing a bookkeeping system are great ways to stay on top of your tax payments so you don’t find yourself facing a penalty come tax season.

4. Keep Track of Deductions

It’s easy to forget about all the expenses you paid for when you’re focused on managing your irregular income. But it’s important to document as much as you can in order to take advantage of every deduction. This may help you reduce your tax liability, ultimately reducing your estimated tax payments and putting less strain on your uneven cash flow.

There are dozens of expenses you can deduct as an entrepreneur or real estate broker. Here are a few of the most common deductions:

  • Startup costs
  • Advertising
  • Online services and subscriptions
  • Travel expenses
  • Continuing education
  • Software, hardware, and other equipment
  • Health insurance premiums and medical care expenses
  • Home office and supplies
  • Retirement contributions

5. Collaborate With a Trusted Advisor

Managing your tax payments can be complex with a variable monthly income, but with the right people on your team, it doesn’t have to be so hard. At Balboa Wealth Partners, we aim to assist high-net-worth individuals and families in handling the fluctuating income that comes with their professions.

If you’re feeling overwhelmed or confused by important tax planning issues, we encourage you to seek the comfort and clarity a financial professional can provide. To get in touch, you can reach us at 949-445-1465 or email me at [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

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Don’t Let Emotional Investing Control Your Wealth

By Jeff Gilbert

Emotions are strong influences in life. Our financial decisions can really tug at our heartstrings, and even when we try our best, it’s difficult to look at our finances without getting emotional.

Why? Our money habits start in childhood and play out through adulthood. For example, someone who knows they should save instead of spend might still struggle to break the habit because they have a deep emotional attachment to spending (it feels good) even though they know it’s not the best choice (they’re not saving enough).

It’s clear that our emotions have an impact on our financial choices. So, let’s dive into how we form our money habits and what we can do to change them, ultimately taking emotions out of the equation.

The Money Script

Do you sometimes feel like the discipline to make rational and well-thought-out financial decisions must be too good to be true? Because no matter how hard you try, you just can’t seem to stick to it? Well, I am sure there are others that feel the same way. These feelings are not uncommon and are most likely due to the emotional and psychological baggage we all carry around relating to our money, otherwise known as our money scripts. And, as with most of the baggage we’ve lugged into our adult lives, these scripts usually start forming at a very young age. 

Even though we may not be aware of it, we spend our childhood picking up on how our parents and other significant role models relate to and handle money, and over time, our brains are subconsciously trained to respond in similar ways. If your parents were confident in their ability to make wise investments, you will likely face investing with confidence as well. Contrarily, if you experienced your parents scrounging to get by and often quarreling over expenses, you may experience some pretty strong feelings of guilt when making certain purchases. 

The seeds of money scripts are planted in childhood, watered by observation, and eventually grow to influence your emotional beliefs about finances as an adult. For this reason, it is vital to be intentional and diligent in talking to your kids about money and modeling healthy financial behaviors. It is just as important to take the time to examine yourself and understand your money scripts and how they influence your financial behavior. 

The Negative Side of Money Scripts

To be fair, not all money scripts are bad. Some behaviors we learn plant seeds for beneficial emotions about finances. However, other behaviors, such as money avoidance, focus on financial status, or the idolization and even worship of money, can be flat-out detrimental. Unhealthy emotions and belief patterns can lead to all kinds of financial problems, such as financial infidelity, compulsive buying, pathological gambling, and financial dependence. Certain money scripts have been tied to lower levels of net worth, lower income, and higher amounts of revolving credit. 

Those may sound extreme, but have you ever let panic during a market downturn or economic shifts take your focus off of your long-term investing plan? Have you ever been unable to make a decision because you were paralyzed with worry and anxiety about the future? Have you ever wreaked havoc on your budget for the momentary high of acquiring something you really wanted? All of these behaviors stem from your personal money script.

Money Scripts Can Be Changed

We often think that if we had more money, we wouldn’t have any problems. But we have money problems because of how we approach money, not necessarily because we don’t have enough. This is good news! We might not be able to drastically increase our income, but we can learn to control our attitudes and perceptions. Our money scripts may be ingrained from childhood, but they are not permanent. With a focused and concerted effort, they can be changed.

The first step you must take in overcoming your money scripts is to identify them. To do this, you must become aware of your emotional responses to common financial situations. Begin to stop and notice your emotional responses to these common experiences:

How do these things make you feel? Anything that elicits strong emotions warrants further reflection. Keep in mind that negative emotions are not the only ones that can harm your financial life. Some positive emotions, like optimism and self-confidence, can bring about negative results if unwarranted and left unchecked.

How to Manage Emotional Money Decisions

The key to changing your money scripts and developing healthier money habits is learning to control your emotions. You can also build some new, healthy habits that protect you financially and incorporate them into your life. Habits and disciplines such as taking advantage of automatic savings, investing through your bank or employer’s retirement plan, scheduling regular family budget meetings, and enlisting the help of someone reliable to keep you accountable are great places to start. Eventually, you will learn how you respond to emotional triggers and you can then take steps, like mandating a “cooling off” period for yourself, before making any decisions. 

Finally, you need to be willing to forgive yourself when you make mistakes. Leave the past in the past and move forward with the new knowledge you have gained. Choosing to forgive yourself for past mistakes frees you up to be more effective with your new tools. As you begin to collect victories, both big and small, you will likely find it even easier to extend forgiveness.  

Your Trusted Financial Ally

Hiring a financial planner is a decision that requires careful thought. You want to have confidence you can trust your advisor with your hard-earned wealth. 

At Balboa Wealth Partners, we think of financial planning as a marathon, not a sprint—and we operate as your running mate for the entire journey. Our goal is to support you by keeping your emotions in check as you make investment decisions. If you’re ready to take the next step, schedule a no-obligation conversation by giving us a call at 949-445-1465 or by email at [email protected].

Scottsdale office: 480-801-5010, [email protected]

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

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Our Midyear 2024 Market Update

By Jeff Gilbert 

Here we are, halfway through 2024 already—have you paused to take time for a financial check-in? How’s your money game going? Now is the perfect moment to slow down and notice the economic trends shaping our market and your portfolio. Despite the hurdles of 2023, we’ve spotted some bright spots in key sectors during the first half of this year.

Read on for a closer peek at our midyear market update. Let’s unpack what’s been shifting and get you set up for success in the months ahead.

Markets Are Up

So far in 2024, financial markets have shown steady, positive performance. While the Dow Jones took a dip in May, the S&P 500 extended its bull market gains into the end of the month. 

Around the same time, the Federal Reserve unanimously chose to keep policy rates unchanged for the sixth meeting in a row, and rates have remained steady since the beginning of 2024. That being said, strong inflation numbers from the first quarter suggest that hitting the 2% inflation target might take longer than anticipated. What’s more, the U.S. GDP has shown positive but slower-than-expected growth coming out of the first quarter. 

This combination of stable interest rates, persistent inflation, and soft GDP growth suggests that the market may see some cautious optimism but also volatility as investors figure out their next moves. How these factors will shape the stock market for the remainder of 2024 is still largely uncertain.

Employment Remains Strong

As of May 2024, the U.S. employment scene shows steady progress with an unemployment rate of 3.9%, which translates to about 6.5 million job seekers. In fact, many leading economists have noted that the labor market remains strong and stable, offering inflation-adjusted pay raises to the average worker. Additionally, real hourly earnings, which are wages adjusted for inflation, grew by 0.5% in April 2024 compared to the previous year.

GDP Is Soft

Despite facing numerous challenges, U.S. consumer spending remained strong throughout 2023. However, this momentum has started to fade. In the first quarter of 2024, the economy posted an annualized GDP growth of 1.3%, which was slightly below the forecasted 1.6%. Additionally, consumer spending grew by 2%, falling short of the anticipated 2.5%.

For 2024, real GDP (GDP adjusted to remove the effects of inflation) is projected to slow to 1.5% in 2024. Looking ahead, real GDP growth is expected to average 2.0% annually from 2024 to 2027—slightly below last year’s prediction of 2.5%.

The Federal Reserve, Interest Rates, and Inflation 

The Federal Reserve has raised its key interest rate to the highest level in 16 years to combat high inflation. After a streak of 11 rate hikes between 2022 and July 2023, the Federal Reserve has continued to hit pause for 2024 while reassessing the current economic growth and inflation. Inflation still remains above the Fed’s 2% target, though it remains lower than its peak of 9.1% in 2022. It’s yet to be seen whether interest rates, or inflation, will bounce back higher and hamper the economy for the remainder of 2024. 

Global Economies Face Similar Issues

Global growth is projected to continue growing at 3.2% for the remainder of this year and into 2025, the same pace as 2023. The global growth forecast for the five years from now is the lowest we’ve seen in decades, largely due to the tight policies needed to manage inflation, price instability, and continued geopolitical tensions. Inflation is expected to decline to 5.9% in 2024 and 4.5% in 2025. Despite the cautious outlook, the MSCI All Country World Index is up over 7% so far this year.

Prepare for Your Future Today

With that said, grasping the economic forecast is just the start—tackling the remainder of 2024 calls for a proactive strategy.

Consider your future: Are you saving enough for retirement? How much can you safely withdraw annually from your accounts? Do your investments align with your financial objectives and risk tolerance? While we can’t control the actions of the Federal Reserve, Congress, or inflation, we can take measures to preserve our financial well-being. The key lies in crafting a robust and flexible financial plan.

At Balboa Wealth Partners, we create personalized financial plans that guide you toward success. Our unique approach is designed to help you capitalize on any market situation. To schedule a complimentary call, give me a call at 949-445-1465 or email me at [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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Planning for the Long Haul: Addressing Inflation’s Impact on Your Financial Plan

By Jeff Gilbert

Inflation acts like erosion as it quietly eats away at the value of our money—often without us realizing it until many years down the road. You might only notice the effect it’s had on your day-to-day life when there’s a bit less in your bank account than before, or when your grocery shopping doesn’t stretch as far as it used to. But when it comes to financial planning, inflation’s impact can be far more significant, particularly for retirees relying on fixed or slowly increasing incomes like Social Security or pensions without cost-of-living adjustments (COLA).

Rising Costs Negatively Impact Income

Let’s start with income, whether you are still working or retired. Some of the largest money problems in the U.S. are rooted in our incomes failing to keep up with rising costs. Take college costs, for example. One of the chief causes for the massive amount of student loans today ($1.77 trillion as of Q3 2023 according to the Federal Reserve) was the disparity between stagnant wages over the past decade and college tuition inflation, which has averaged 8% annually, according to Bankrate.com. 

This rate of increase not only dwarfs wage/salary COLAs, but most prudent college-saving investment vehicles as well. For parents trying to save and pay for their children’s college expenses, this type of inflation could ruin the best-laid financial plans.

Medical and healthcare inflation ranks right behind college tuition as one of the fastest-rising expenses, especially for retirees who tend to incur these costs more often than most other adults. According to Deloitte, a leading accounting and financial consulting company, from 2001 to 2021, healthcare costs increased a clip of 3.3% annually, nearly a third more than the average of all goods and services, and consumer incomes aren’t enough to keep pace.

Inflation also creeps into other sectors of our financial lives. From travel expenses, to purchasing a car, building supply and labor costs that add up into the price of a new home, each little tick up in inflation figures can compound into driving up the final cost of many of the goods and services we enjoy daily. It is for this very reason that the Federal Open Market Committee (Federal Reserve) has been so adamant about driving down the high inflation we experienced post-pandemic.

Wise Investments Can Curb Inflation’s Devastating Effects

On the asset side, inflation is a critical reason we need to invest our money wisely. As the post-pandemic years showed us, high inflation (and the accompanying high interest rates that arise as a result), can have a devastating effect on whether our investments (and purchasing power) are truly growing, keeping pace, or falling behind. For example, if inflation is cited as 6% but your bank CD or savings account is only yielding 3-4%, or your monthly pension benefit does not have a cost-of-living increase each year, the purchasing power of your money is falling behind. 

Factor Inflation Into Your Financial Plan

Considering these factors, it’s essential to integrate inflation into your financial plan, whether you’re doing it independently or with a financial advisor. Even though there are many financial planning software programs, inflation assumptions still can vary widely. Over a 25-year retirement period, a person’s retirement expenses could potentially double by the later years.

Whether you’re already retired, approaching retirement, or saving for future goals, adjusting inflation assumptions for different expense categories can increase the accuracy of your financial plan.

And like it or not, inflation will always be a factor throughout our lives, which highlights the need to address its impact in every financial conversation. Are you seeking a financial partner to support your long-term financial well-being? Balboa Wealth Partners is here for you. Let’s tackle the important questions together and move toward your financial goals with confidence. Contact us today at 949-445-1465 or email me at [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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Top 10 Tax-Planning Strategies to Maximize Your Savings

By Jeff Gilbert

Tax planning often falls into the category of tasks we tend to procrastinate—those things we know we should do but would rather avoid. While it’s tempting to delay until tax day approaches, being proactive with your tax-planning efforts can ultimately save you both time and money. 

At Balboa Wealth Partners, our mission is to guide our clients with strategies to retain more of their earnings by reducing tax liabilities and optimizing savings. Here are my top 10 tax-planning strategies for 2024 to consider in your financial plan.

Maximize Your Retirement Contributions

Maximizing your retirement contributions is one of the best ways to minimize your tax liability. This is because retirement plans offer useful tax advantages that are not available if you were to simply put your money in a savings account. There are several accounts to consider, depending on your unique circumstances:

  • 401(k), 403(b), and 457 Plans: These accounts allow you to contribute up to $23,000 annually for 2024 ($30,500 if over age 50). Not only that, but contributions done pre-tax won’t show up as part of your annual income. This is a great way to defer taxes until your retirement years when you could potentially be in a lower tax bracket.
  • Traditional IRA: Contributing to a traditional IRA is another way to reduce your tax liability if your income is within certain limits. You can contribute up to $6,500 for 2023 and $7,000 for 2024, with a $1,000 catch-up contribution limit for those over age 50. Unlike the qualified retirement plans listed above, contributions to a traditional IRA can be made until the April 15th tax filing deadline.
  • Roth IRA: This is an attractive savings vehicle for many reasons, including no required minimum distributions (RMDs), tax-free withdrawals after age 59½, and the ability to pass wealth tax-free to your heirs. The contribution limits are the same as traditional IRAs. However, Roth IRAs have income restrictions and you may not be able to open an account outright if you are above certain limits.

Consider Roth Conversions

If you are outside of the income eligibility threshold for Roth IRAs but still want to take advantage of the Roth tax benefits, a Roth conversion could be the right strategy for you. It works by paying the income tax on your pre-tax traditional IRA and converting the funds to a Roth IRA.

You could also consider the mega backdoor Roth and backdoor Roth IRA strategies:

  • Mega Backdoor Roth: With this strategy, you would convert a portion of your 401(k) plan to a Roth. This involves first maximizing the after-tax, non-Roth contributions in your plan, then rolling it over to either a Roth 401(k) or your Roth IRA. With the mega backdoor Roth, you convert a portion of your 401(k) plan to Roth dollars.
  • Backdoor Roth IRA: In this case, you would make an after-tax (non-deductible) contribution to a traditional IRA. You then immediately convert the funds to a Roth IRA to prevent any earnings from accumulating. This strategy makes sense if you don’t already have an IRA set up yet.

All three Roth conversion strategies will allow the contributions to grow completely tax-free and allow you to avoid future RMDs, which is helpful if you expect to be in a higher tax bracket in the future. 

3. Contribute to a Health Savings Account

An efficient but underutilized way to maximize your savings and minimize your taxes is to contribute to a health savings account (HSA). HSAs offer triple tax savings: contributions are tax-deductible, earnings grow tax-free, and you can withdraw the funds tax-free to pay for medical expenses. Unused funds roll over each year and will essentially become an IRA at age 65, at which point you can withdraw funds penalty-free for non-medical expenses. You must be enrolled in a high-deductible health plan in order to qualify for an HSA. 

HSAs can be a great tax-management tool if you are able to pay medical expenses out of pocket and leave the HSA funds to grow. The 2023 contribution limits for HSAs are $3,850 for individuals and $7,750 for families. (The 2024 limits increased to $4,150 and $8,300, respectively.) If you are 55 or older, you may also be able to make catch-up contributions of $1,000 per year. You have until April 15th for your contributions to count for the previous year’s tax return. 

4. Contribute to a Donor-Advised Fund

If you itemize your tax deductions because of charitable contributions, you may want to consider investing in a donor-advised fund (DAF). You can contribute a lump sum all at once and then distribute those funds to various charities over several years. With this strategy, you can itemize deductions when you make the initial contribution and then take the standard deduction in the following years, allowing you to make the most out of your donation tax-wise.

You can also donate appreciated stock, which can further maximize your tax savings. By donating the appreciated position, you avoid paying the capital gain tax that would have been due upon sale of the stock and you are effectively donating more to your charities of choice than if you had sold the stock and donated the proceeds.

5. Make a Qualified Charitable Donation

If you own a qualified retirement account and are at least 70½, you can use a qualified charitable distribution (QCD) to receive a tax benefit for your charitable giving. Since this is an above-the-line deduction, it can be used in conjunction with other charitable tax strategies. A QCD is a distribution made from your retirement account directly to your charity of choice. It can also count toward your RMD when you turn age 73, but unlike RMDs, it won’t count toward your taxable income. Individuals can donate up to $100,000 in QCDs per year, which means a married couple can contribute a combined amount of $200,000!

6. Utilize Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss in order to offset the gains in your portfolio. By realizing a capital loss, you are able to counterbalance the taxes owed on capital gains. The investments that are sold are usually replaced with similar securities in order to maintain the desired asset allocation and expected return. 

With the ups and downs the market experienced in 2023, chances are you have some capital losses that can be utilized. For example, if you are expecting a large capital gain this year, sell an underperforming stock and harvest the losses to offset your gain. 

Tax-loss harvesting can also be used to reduce your ordinary income tax liability if capital losses exceed capital gains. In this case, up to $3,000 can be deducted from your income, and capital losses in excess of this amount can be carried forward to later tax years. 

7. Understand Long-Term vs. Short-Term Capital Gains

Understanding the tax implications of long-term versus short-term capital gains can go a long way in reducing your tax liability. For instance, in 2023 a married taxpayer would have paid 0% capital gains tax on their long-term capital gains if their taxable income falls below $89,250. That rate jumps to 15% and 20% for taxable incomes that exceed $89,250 and $553,850, respectively. Understanding where you fall on the tax table is an important part of minimizing your liability. 

Gains that are short term in nature (held less than one year) will be taxed at your marginal tax bracket, which could be up to 37%! Knowing both the nature of your gain, as well as your tax bracket, is crucial information if you want to minimize your tax liability. 

8. Take a Qualified Business Income Deduction

Business owners involved in partnerships, S corporations, or sole proprietorships can take a qualified business income deduction (QBID) to help reduce taxable income and maximize tax savings. This allows for a maximum deduction of 20% of qualified business income, but limits apply if your taxable income exceeds a certain threshold. To qualify for this deduction, consider reducing or deferring income so that you can remain below the phase out threshold. A great way to do this is to maximize your retirement contributions to tax-advantaged accounts (as discussed in point #1).

9. Consider Estate Tax-Planning Techniques

Estate tax-planning techniques can also be an effective way to reduce current-year tax liability. For 2024, the lifetime exemption for assets that can be given gift-tax-free is estimated at $13.61 million for individuals and $27.22 for married couples (12.92 million for 2023). 

The annual gift tax exclusion increased to $18,000 per recipient in 2024, up from $17,000 in 2023. This is the annual amount taxpayers can give tax-free without using any of the above-mentioned lifetime exemption. Not only that, but the annual exclusion applies on a per-person basis, so each taxpayer can give $18,000 per person to any number of people per year. 

Though gifting and other estate tax-planning strategies are not tax-deductible, they can help to significantly reduce your taxable estate over time.

10. Make Sure Your Advisory Team Is Working Together

Beyond consulting with a tax professional, you’ll want to be sure your entire financial team is working together to provide cohesive oversight and guidance. This should include professionals like CPAs, financial advisors, investment advisors, and estate attorneys. Your finances don’t exist in a bubble and so neither will your tax-minimization strategies. When your advisory team works together, strategies are easier to identify and execute, and proactive tax solutions become much easier to implement, reducing stress and your tax bill.

Take Action Today

Tax planning doesn’t need to feel confusing, especially when you have the guidance of an advisor with years of experience in tax strategy. At Balboa Wealth Partners, we specialize in simplifying the complexity of the tax code and creating a plan to meet your specific needs. If you’re ready to reduce your tax burden and boost your savings, we’re here to assist you. Schedule an initial consultation by contacting us at 949-445-1465 or email me at [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

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The Difference Between Investment Management and Financial Planning

By Jeff Gilbert

A wide array of ideas might come to mind when you think about what a financial professional can help you with. Is it providing investment advice? Investment management? Financial advice? Financial planning? Wealth management? All of the above? 

There is a common belief that all these words are just synonyms for essentially the same thing, but that’s just not the case. Each of these services involve different processes and deliverables. 

In this guide, we discuss the difference between financial planning and investment management and what you can expect from working with Balboa Wealth Partners.

Financial Planning vs. Investment Management

According to the CFP Board, financial planning is a collaborative process that helps maximize a client’s potential for meeting life goals through financial advice that integrates relevant elements of the client’s personal and financial circumstances. Essentially, it’s a holistic process that looks at all parts of a client’s financial situation to create a customized plan to achieve their financial goals. It includes the following subject areas:

  • Retirement planning
  • Education planning
  • Tax planning
  • Investment planning
  • Estate planning
  • Risk management and insurance planning

Investment management, on the other hand, aims to meet particular investment goals for the benefit of clients whose money a financial professional has the responsibility of overseeing. It is a siloed service that does not necessarily incorporate the other aspects of a client’s unique financial situation. Financial planning usually includes investment management, but investment management does not automatically include financial planning.  

Our Financial Planning Process

What makes our financial planning process unique? With more than 40 asset management firms trading their proprietary strategies directly with the Balboa Wealth Partners team, these subadvisor relationships deliver a unique, tax-efficient portfolio strategy to our clients. This process eliminates costly layers of fees and delivers the portfolio strategies of some of the world’s preeminent asset managers.

We have the ability to solve a wide range of client challenges through our retirement income gap analysis and complex estate and succession planning. From simple cash flow planning and goal-based assessments to detailed tax analysis and estate planning, we have the experience to address your goals and objectives. Empowering you by integrating your planning results in real time, directly into the Balboa Client Portal, we tailor planning to you, modeling what-if scenarios, and stress-testing your current allocations and cash flow requirements.

Our Investment Management Process

The Balboa Wealth Partners investment management model delivers high-touch, responsive service, strategically paired with access to institutional-caliber investment guidance in a way that eliminates conflicts, reduces fees, and opens the doors to truly comprehensive planning.

Our clients receive sensible, effective advice, along with a firm commitment to collaborate with other professional advisors—offering a full array of wealth management and investment advisory services.

We stress-test scenarios incorporating a wide range of asset classes, including stocks, bonds, ETFs, mutual funds, closed-end funds, options, separately managed accounts, hedge funds, and non-traded REITs. We blend internally managed strategies with rigorously selected third-party managers, best-in-class third-party mutual funds, ETFs, hedge funds, and private equity managers to develop a comprehensive platform of customized investment strategies.

Are You Looking for Comprehensive Financial Planning?

We know the first step is always the hardest. If you are looking for comprehensive financial planning that includes strategic investment management, we’re here for you. 

At Balboa Wealth Partners, the needs of our clients come first. Our clients want a partner who values them and understands the importance of what they have built. Our advisors specialize in overseeing your financial affairs and coordinating the day-to-day execution of your long-term financial plans.

To set up an initial call, reach out to us, give me a call at 949-445-1465 or email me at [email protected]. To reach the Scottsdale office, call 480-801-5100 or email [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.

Don’t Let 2024 Catch You Unprepared: Review Your Financial Plan

By Jeff Gilbert

With the new year comes renewed commitments to improving your finances, strengthening your savings, and planning for the future. Now is an opportune time to take a proactive stance toward your financial future. 

I understand the unique financial landscape that high-net-worth and ultra-high-net-worth families navigate, and with 2024 before us, it’s time to align your financial plan with your aspirations. From scrutinizing retirement contributions and investments to fine-tuning tax-saving strategies and charitable giving, I am here to guide you through a comprehensive review that safeguards your financial well-being in the coming year.

Retirement 

Maximize Your Retirement Savings

Be sure to max out your retirement contributions for 2023 prior to April 18th of 2024. Many employers offer retirement plans like 401(k)s, 403(b)s, and 457s, which allow you to contribute up to $23,000 for 2024 ($30,500 if over age 50).

These contributions are automatically deducted from your paycheck and won’t show up as part of your annual income, so the more you can maximize your contributions during the year, the less taxable income you will have. With this strategy, you can defer taxes until your retirement years when you could potentially be in a lower tax bracket.

Keep in mind that the SECURE 2.0 Act will increase catch-up contributions starting in 2025. At that point, individuals between ages 60 and 63 will be able to contribute up to $10,000 or 150% of the regular catch-up contribution to their retirement plan.

Contribute to an IRA

Contributing to a traditional IRA is another strategy to reduce your AGI if your income is within certain limits. By contributing pre-tax funds, you can effectively reduce your current-year tax liability, but you will owe tax on both the contributions and the account growth when you withdraw the funds in retirement. Alternatively, you can contribute to a Roth IRA, where taxes are paid up front but distributions are tax-free at retirement as long as the first contribution was made at least five tax years ago. The 2023 contribution limit for IRAs is $6,500 with additional $1,000 catch-up contributions for individuals over the age of 50. Contributions can be made until April 18th, 2024, for the 2023 tax year so there’s still time to utilize this strategy. If you’ve already maximized your 2023 contributions, start contributing for the 2024 tax year. The 2024 contribution limit is for $7,000 with additional $1,000 catch-up contributions for individuals over the age of 50.

Understand Your RMDs

Starting in 2023, the rules around required minimum distributions (RMDs) have changed again thanks to SECURE 2.0. If you turn 72 after December 31, 2022, your RMD age will be increased to 73. If you turn 74 after December 31, 2032, your RMD age will be 75. If you are subject to RMDs in 2023, the sooner you understand the rules around your distribution, the better. Though we are barely into the new year, you don’t want to be caught off guard come December 31. Depending on what age you are required to start taking distributions (70 ½, 72, 73, or 75), you could face a 25% – 50% penalty on missed distributions. 

If you don’t need your RMD money to live on, consider donating the funds to a worthy cause, which could also lessen your tax burden for the year. To calculate your RMD, use one of the IRS worksheets. 

Cash Flow 

Assess Your Emergency Fund

Now is the time to ensure that you have enough money set aside in your emergency fund or create a plan to build this up over the next year. An adequate emergency fund should cover 3-6 months of necessary living expenses, including mortgage or rent, utilities, groceries, transportation, etc. 

With all stock market uncertainty and recession fears, many experts have suggested maintaining a larger emergency fund, closer to 6-12 months of expenses. If you’re single, or your household only has one source of income, consider saving on the higher end of this scale to make sure you’re covered in the event of a job loss or reduction in income.

However much you save, be sure this money is held in a highly liquid account. It needs to be readily available and easily accessible, but it should also be in an account that offers a competitive interest rate so you don’t lose out on potential growth.

The SECURE 2.0 Act has made saving for emergencies a bit easier. In 2024, participants will be allowed to contribute up to $2,500 annually to an “emergency fund” within the 401(k) plan. These contributions can be accessed before retirement and will not be subject to the 10% early withdrawal fee.

Create and Maintain a Budget

The word “budget” seems to have a negative connotation; many people think that if you budget, you’re broke. Budgeting actually gives you permission to spend and is a simple way to keep track of your expenses and be aware of how much you’re actually saving each month. If one of your goals for the new year is to improve your cash flow and make better financial decisions, creating and maintaining a budget is a great place to start.

Risk Management

Contribute to a Health Savings Account

If you’re enrolled in a high-deductible health plan, consider contributing to a health savings account (HSA) in 2024. HSAs offer triple tax savings. Contributions are tax-deductible, earnings grow tax-free, and withdrawals are tax-free if used to pay for medical expenses. 

The 2023 IRS contribution limits for HSAs are $3,850 for individuals and $7,750 for families ($4,150 for individuals and 8,300 for families in the 2024 year). If you are 55 or older, you may also be able to make catch-up contributions of $1,000 per year. 

Review Your Workplace Benefits

The beginning of the year is a great time to review your workplace benefits and update your coverage levels if need be. If you had a major change to your family structure in 2023, like a birth, marriage, or divorce, now’s the time to update your 2024 health, dental, and vision insurances. Many employers also offer group life insurance which can be a great addition to any private coverages you may have. 

Contribute to Your Flexible Spending Account

Your employer may also offer a health care flexible spending account, which allows you to set aside pre-tax money for qualified out-of-pocket medical expenses. In 2023, you can contribute up to $3,050 (2024 limits have increased to a max of $3,200)

Unlike HSAs, FSAs do not require that you participate in a high-deductible health plan, but they are not as versatile either. For instance, HSAs allow you to carry over any unused funds to the next plan year, whereas FSAs only allow you to carry over up to $610. Generally speaking, if you do not have access to an HSA, then contributing to an FSA is likely a good idea.

Revisit Your Plans and Policies

The new year is also a great time to assess your insurance needs, review your coverages, and update designated beneficiaries to reflect your current financial situation. For example, if you paid off debt, you may not need as much life insurance coverage since your family’s liabilities have decreased. You might also want to evaluate your need for other types of insurance, such as long-term care or disability insurance. 

Taxes

Donate to Charity

Donating to charity doesn’t have to wait until the holiday season. In fact, charitable gifting is a great tax strategy to incorporate throughout the year.

Annual gifts to qualified charitable organizations may be deemed an eligible itemized deduction and can be a great way to give back at the end of the year while also minimizing your tax bill. With the higher standard deduction, you’ll need to make sure your total itemized deductions for the year exceed $13,950 for an individual filer, and $27,700 for married filing jointly ($14,600 and $29,200 for 2024). If your deductions fall below this amount, consider doing several years’ worth of giving in one year.

Donor-advised funds are another option that allow you to contribute a lump sum all at once and then distribute those funds to various charities over several years. With this strategy, you can itemize deductions when you make the initial contribution and then take the standard deduction in the following years, allowing you to make the most out of your donation tax-wise.

Invest in a College Savings Plan

If you have children or grandchildren in your life, contributing to a 529 savings plan is an excellent way to jump-start their college savings in the new year. 

This type of educational savings plan was created so that families can receive tax benefits for saving toward qualified higher-education expenses. After-tax money is invested in a 529 plan where it grows tax-free. When the money is later taken out for qualified expenses, there are no federal taxes due. 

In 2023, you can give up to $17,000 (or $34,000 if gift-splitting with a spouse) per 529 account gift-tax-free. The numbers for 2024 are $18,000 per individual contributor. There’s also a special election that allows you to give 5 years’ worth of contributions as a lump sum, meaning you could give up to $85,000 (or $170,000 if gift-splitting) entirely gift-tax-free! 

What’s more, remaining 529 balances can be rolled into a Roth IRA for the account beneficiary starting in 2024, so you won’t have to worry about losing the funds if your child chooses not to go to college or doesn’t use the full account amount. Keep in mind that the account must be at least 15 years old and the maximum lifetime rollover limit is $35,000. Contributions made in the last 5 years will not be eligible for rollover.

Consider a Roth Conversion

Roth IRAs are an attractive savings vehicle for many reasons, including no required minimum distributions (RMDs), tax-free withdrawals after age 59½, and the ability to pass wealth tax-free to your heirs. Unfortunately, Roth IRAs have income restrictions, and you may not be able to open an account outright if you are above certain limits. 

To get around this threshold, consider a Roth conversion. Using this strategy, you will pay tax on money contributed to a traditional IRA, thereby converting it into a Roth. If you believe you will earn less income in 2024, or your traditional IRA balance has taken a hit due to recent market volatility, a Roth conversion may be a great opportunity for your specific situation. Converting to a Roth also allows your money to grow tax-free for as long as you’d like.

Consider Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss in order to offset the gains in your portfolio. By realizing a capital loss, you are able to counterbalance the taxes owed on capital gains. The investments that are sold are usually replaced with similar securities in order to maintain the desired asset allocation and expected return. 

Given the continued market volatility of 2023, this can be a great way to make the most out of a losing situation by using an investment loss to offset your tax liability. Even though the deadline for this to count toward the 2023 tax year has passed, there will likely be ample opportunity to revisit this strategy in 2024. Talk with your advisor about potentially harvesting your losses and if it makes sense for you.

Investments

Review Your Asset Allocation & Invest With Impact

The beginning of the year is also a great time to review your asset allocation strategy and incorporate ESG and impact investing if desired. Given the dramatic market volatility and historic levels of inflation over the last year, it’s crucial to evaluate your investments and make sure your portfolio is properly diversified in 2024. It should also be tailored to your specific risk tolerance level, ensuring you earn enough returns to keep up with inflation but you’re not overexposing yourself to risk. 

If you are interested in using your funds to support environmental, social, or governmental issues (ESG), you can also consider impact investing as a way to earn returns while also promoting change on causes you care about.

Estate Planning

Review Beneficiary Designations

If you had any major life events happen in 2023, like the birth of a child, marriage, divorce, or a death in the family, make sure you review your beneficiary designations for 2024. There are several assets, including retirement accounts, bank accounts, and life insurance policies, that are distributed based on beneficiary designation and not the terms of your will. If you have an updated will but an outdated beneficiary listed on one of these accounts, there is a chance your assets will not pass according to your wishes. 

Review Your Estate Documents

Similarly, it’s important to review your estate planning documents, including your last will and testament, any powers of attorney, living wills, and/or trust documents. The new year is always a good time to take another look at these documents or start drafting them if you don’t already have them in place. 

Make the Most of the Annual Gift Tax Exclusion

If you’re looking to reduce your taxable estate in 2024, consider making gifts up to the annual exclusion amount. Individuals can give to each recipient (and to an unlimited number of recipients) up to $17,000 and married couples can give up to $34,000 without triggering gift tax (this increases to $18,000 per person in 2024) Not only that, but the beneficiary of your gift will not have to report it as income. This is a great way to spread your wealth amongst family and friends.

We’re Here to Help

Whether it’s optimizing your retirement contributions, strategically managing investments, or fine-tuning your charitable endeavors, a proactive approach now can pave the way for a prosperous and fulfilling future. 

Partnering with a professional can help prevent the opportunities of a new year from slipping through your fingers. We at Balboa Wealth Partners are here to help. Let’s collaborate to build a dynamic strategy that propels you toward financial success. Reach out, and together let’s make 2024 a year of financial achievement—give me a call at 949-445-1465 or email me at [email protected].

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With over three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout the entire country. To learn more, connect with Jeff on LinkedIn or email [email protected]. 

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Kingswood Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Kingswood. Neither firm is affiliated.