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2023 Midyear Market Update

By Jeff Gilbert

Oof. 2023 isn’t shaping up to be much friendlier than 2022. However, there is some good news: the first half of the year has shown some signs of progress. 

Let’s take a deeper dive into those areas, as well as what you can do to prepare for the second half of the year and beyond.

The Markets Are Up

So far in 2023, the performance of the financial markets has been measured, yet positive. While the Dow Jones remains effectively flat, mirroring its position from this time last year, the S&P 500 has seen a modest rise, up 8.6% for the year to date. The Vanguard Total Stock Market Index Fund, providing a broad snapshot of the entire U.S. market, aligns closely with the S&P 500, reflecting an 8.2% increase. The tech-centric NASDAQ has shone brighter, growing a noteworthy 23% this year. 

However, adopting a longer-term perspective paints a slightly different picture. Over the course of the past year, all these indices are essentially unchanged from their positions this time in 2022, suggesting a degree of stability in the midst of fluctuating market conditions. 

Underlying these market movements, the U.S. GDP maintains positive, yet isn’t high enough to be called robust. Meanwhile, the Federal Reserve continues its trend of gradually raising interest rates. Despite this seemingly stable backdrop, it remains uncertain how these various forces will influence the stock market’s performance in the second half of 2023. 

Employment Is Strong

The U.S. employment scene shows steady progress with an unemployment rate of 3.4%. Despite this promising figure, representing 5.7 million active job seekers, there are complexities beneath the surface. While unexpected job losses and short-term unemployment have decreased, the numbers of long-term unemployed and part-time workers desiring full-time roles remain a concern. Also notable is the rise in people outside the labor force but eager to work, up to 5.3 million.

GDP Is Growing

The U.S. economy has shown signs of rebound in Q1 2023 with an annualized GDP growth of 1.3%, slightly exceeding the initial estimates and market predictions of 1.1%. Consumer spending growth outperformed expectations, rising to 3.8% despite ongoing high inflation. 

This growth, while not overly impressive, still stands in contrast to 2022, which saw two negative GDP quarters. It is also expected to continue, with forecasts predicting a growth rate of 1.5% by the end of the second quarter. 

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. However, this streak of 10 hikes could be nearing its end as the Fed assesses their impact on economic growth and inflation. Despite these increases, inflation remains above the Fed’s 2% target, currently sitting at 5%, far lower than its peak of 9.1% in 2022. Finally, the rising costs of goods and services, as well as tighter lending requirements and higher interest rates, could hamper the economy in the second half of 2023 as well as 2024. 

The World Is Experiencing the Same Issues As the U.S.

Global growth is projected to decline from 3.4% in 2022 to 2.8% in 2023, the lowest medium-term forecast in decades, largely due to the tight policies needed to curb inflation, deteriorating financial conditions, and geopolitical tensions. Inflation is expected to decline from 8.7% to 7% between 2022 and 2023, but the return to ideal inflation rates is not expected before 2025. Despite the cautious outlook, the MSCI All Country World Index is up over 7.5% so far this year.

Focus On What You Can Control

Understanding these economic data and projections can be a crucial part of preparing for the rest of 2023, but it’s only part of the story. To make the most of these insights, you must integrate them into a comprehensive financial plan that addresses your personal goals. For instance, how much do you need to save to meet your retirement goals? How much can you safely distribute from your accounts each year? Are your investments structured optimally for your financial situation? No matter what the economy, the Federal Reserve, Congress, or inflation does for the rest of the year, these are factors within your control. 

At Balboa Wealth Partners, your needs come first no matter what’s happening with the economy. We specialize in overseeing your financial affairs, coordinating the day-to-day execution of your long-term financial plans, and keeping you from falling victim to common retirement pitfalls. To learn more, 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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Common Retirement Mistakes and How to Avoid Them

By Jeff Gilbert

Making mistakes is an inevitable part of being human, and we often use past mistakes as a way to learn and make better decisions in the future. However, in retirement, there is far less room for error. Making such a significant financial transition involves shifting from earning an income and building wealth to depending on that wealth to sustain you for the rest of your life. Even if you’ve been preparing for retirement for years, it’s important to stay vigilant in order to avoid making costly mistakes. 

Rather than coasting on autopilot, there are several key decisions and actions you can take to help smooth the transition into retirement. Let’s explore five common mistakes made by retirees and discuss tips on how to avoid them.

1. Overspending in Retirement

Do you know what you will do with your newfound freedom in retirement? Many people start by pursuing all the things they didn’t get to do while working—traveling the world, picking up a new hobby, remodeling their home, and the list goes on.

But many people underestimate the amount of money they’ll spend in those first few years of retirement. With so much extra time on your hands, it’s easy to make a lot of little purchases that add up to a lot over time. 

If you want to avoid this mistake, create a detailed but realistic budget and stick to it. Yes, you can budget for extras such as a vacation or a new hobby, but make sure you know how it will affect your nest egg before you follow through with it. And be sure to work with your advisor to find a withdrawal rate that will stretch your money for as long as possible.

2. Underestimating Healthcare and Long-Term Care Costs

Retirees receive Medicare after age 65, but most of the time, this isn’t enough to cover chronic healthcare needs in retirement. For example, did you know dental, basic vision, over-the-counter medication, and long-term care are not covered by Medicare? 

The average couple at age 65 will spend $315,000 after tax on medical expenses. What’s more, the real retirement enemy often comes in the form of long-term care costs. Nearly 70% of retirees will need some form of long-term care during their lifetimes, and with average long-term care costs hovering around $315 per day or $9,584 per month for a private room in a nursing home, it’s critical for you to have a plan in place to cover these expenses. 

First, cautiously watch your spending in retirement to ensure there is a financial margin in place to protect you when larger medical bills hit later in life. And when choosing your health insurance for retirement, make sure you understand all Medicare options and supplements and work with an experienced professional to help you evaluate your options. Finally, explore your long-term care coverage options, such as traditional long-term care insurance, life insurance with a long-term care rider, and annuities with long-term care riders. The earlier you get coverage, the better, since the older you get, the higher your cost for a long-term care insurance policy will be and the greater the likelihood of your application being denied.

3. Overreacting to Stock Market Volatility 

Retirees usually want to play it safe in the stock market, by investing conservatively and safeguarding their nest egg as much as possible. But when you play it too safe, your savings can’t keep up with inflation and you end up losing money down the line. With inflation hitting a staggering 9.1% in 2022 and still hovering around 6% in February 2023, most retirees can’t afford to avoid the stock market volatility that comes with investing at least a portion of their savings in growth assets.

Since your retirement may last anywhere from 20 to 30 years—as much time as you’ve spent in the workforce—don’t get caught up in investing too conservatively just to avoid short-term volatility. When your portfolio is too conservative, inflation becomes the biggest threat to your assets. 

4. Claiming Social Security Too Early

Don’t assume it’s best to start collecting Social Security at age 62 (or at full retirement age, for that matter). If your full retirement age is 66, for example, you could receive a 32% increase in monthly benefits by waiting to collect Social Security until age 70. This means if your standard benefit amount is $1,500 per month, you could receive $1,980 by waiting four more years. This equates to thousands of extra dollars over the course of your retirement.

When deciding when you should start collecting Social Security, consider the size of your nest egg, your retirement date, and the current state of your health. Calculating when to claim your benefits is both an art and a science. If you need help, reach out to a trusted financial advisor who can help you run the numbers.

5. Miscalculating Taxes on Retirement Income

Your retirement accounts are all taxed differently. If you don’t have a strategic withdrawal plan in place, you could end up with a large tax bill at the end of the year. For example, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. Creating a tax plan can help you strategically withdraw from your various retirement accounts and minimize your tax liability. 

Speak with a financial planner or tax advisor about creating a tax-efficient distribution strategy for retirement. This professional can look at your tax bracket, retirement accounts, and Social Security to help you withdraw money in the most tax-efficient way. 

Partner With a Professional

Although it’s impossible to avoid all mistakes, it is essential to take proactive steps toward a satisfying retirement. At Balboa Wealth Partners, we specialize in wealth management and can assist you in sidestepping the expensive mistakes often made during retirement. As your dedicated partner in this journey, we can collaborate with you to create a practical budget and develop a tax-efficient distribution strategy to help increase your savings. If you’re interested in our services and how we can help you enjoy a worry-free and comfortable retirement, give me a call at 949-445-1465 or email me at [email protected]. Or complete a complimentary risk assessment here.

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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Don’t Let Your Wealth Slip Away: Tips for Making Your Money Work for You

By Jeff Gilbert

As a high-net-worth individual, you have likely worked hard to accumulate your wealth. But that doesn’t mean you shouldn’t make smarter financial moves to maximize the wealth you have already built. At Balboa Wealth Partners, our mission is to be your guide to financial independence. That’s why we’ve put together this list of our top 10 tips for making your money work for you—not the other way around.

Develop a Comprehensive Financial Plan

The first step is to set clear financial goals and develop a comprehensive financial plan. After all, you can’t make your money work for you if you don’t know where you want to go! Make sure your goals are specific, measurable, and realistic. Common financial goals include saving for a down payment on a house or vacation home, building up an inheritance for children or grandchildren, and achieving your ideal retirement lifestyle. Once you have a clear goal in mind, you can create a plan to get there and manage your money in ways that will work toward your ultimate goal.

Diversify Your Investments

High net-worth individuals have a wide range of investment options available to them. To maximize your wealth and make your money work for you, consider diversifying your portfolio and exploring a range of investment vehicles. Diversification is key to managing risk and realizing long-term growth. Spread your investments across a range of asset classes, including stocks, bonds, real estate, and alternative investments. Within each asset class, consider investing in a variety of sectors and industries to further diversify your portfolio. 

Working with a financial advisor who understands your goals and risk tolerance can be a great way to develop a customized investment strategy that aligns with your financial objectives and takes into account your unique situation. By diversifying your portfolio and exploring a range of investment options, you can maximize your wealth and make your money work for you.

Avoid or Pay Off High-Interest Debt

Put simply, revolving high-interest debt is the archenemy of making your money work for you. It is the villain in your story, and it should be avoided as much as possible. If you have high-interest debt, such as credit card debt, paying it off should be your top priority. If left to accumulate, it can be incredibly challenging to make progress toward your financial goals, even for high-earners. Consider consolidating your debt or using the snowball or avalanche method to pay it off systematically.

Automate Your Finances

Automating your finances can be a powerful tool. Setting up automatic transfers from your checking account to your savings or retirement accounts allows you to consistently save and invest without even having to think about it. You can also automate bills to ensure you never miss a payment and avoid late fees. Automating your finances not only saves you time and effort but also helps you stay on track toward your financial goals. Just be sure to monitor your accounts regularly to keep everything running smoothly.

Utilize a Rewards Card & Pay it Off Each Month

This tip can be a great way to make your money work for you, but it should be used with caution and not as a way to live beyond your means. Many credit cards offer cash back, points, or miles for every dollar you spend, which can add up to significant rewards over time. Using these cards for everyday expenses you have to pay regardless can be a powerful way to make your money stretch further. 

It’s crucial to use this strategy responsibly and pay off the balance in full each month to avoid interest charges and debt. By paying off your balance each month, you can enjoy the benefits of a rewards credit card without incurring any additional costs. Compare different cards and their rewards programs to find one that fits your spending habits and financial goals.

Open a High-Yield Savings Account

One of the easiest ways to put your money to work is by putting it into a high-yield savings account. These accounts offer competitive interest rates and allow you to earn more on your liquid cash assets (like an emergency fund) without subjecting them to the volatility of the stock market. Start by comparing different banks and their interest rates, fees, and other features to find a high-yield savings account that suits your needs. While the interest earned on a savings account may not be as high as other investment options, it provides a low-risk way to earn passive income on your savings.

For high-net-worth individuals looking to earn more on their idle cash, there are other options that can improve your interest rate while still keeping your funds relatively safe. These include money market accounts, certificates of deposit, and short-term Treasury bills. No matter which option you choose, putting your idle cash to work is a great strategy for maximizing your wealth.

Take Advantage of Employer Matching Contributions

If your employer offers a retirement savings plan, such as a 401(k) or 403(b), don’t neglect to take advantage of any matching contributions. Employer matching contributions are essentially free money that can significantly boost your retirement savings. 

For example, your employer may offer a 50% match on the first 6% you contribute. If you earn $100,000 and contribute the full 6%, your employer will contribute an additional $3,000 to your retirement account. That’s an extra $3,000 toward your retirement that you didn’t have to earn or invest on your own! Be sure to contribute enough to your retirement account to maximize any employer-matching contributions, as it can make a big difference in the long run.

Give Back

Giving back to your community and supporting causes you believe in is an important way to use your wealth to make a positive impact on the world. It’s also a great way to make your money work for you through proactive tax planning. There are many ways you can give back, such as:

  • Establishing a charitable foundation: Setting up a charitable foundation can have significant tax benefits for high-net-worth individuals. Contributions to the foundation are tax-deductible and grow tax-free. Charitable foundations can also be used as an effective estate planning tool.
  • Donating to organizations: You can donate to a range of organizations that align with your values and mission. One popular way to do this is through a donor-advised fund (DAF). With a DAF, you can make a tax-deductible contribution to a fund, then recommend grants to your favorite charities over time. This allows you to receive an immediate tax benefit while still having flexibility and control over how your charitable dollars are distributed.
  • Qualified charitable distributions (QCDs): If you are over 70½ and have an individual retirement account (IRA), you can make QCDs directly to a charity of your choice. This allows you to satisfy your required minimum distributions while also making a charitable contribution that is excluded from your taxable income.

Invest in Real Estate

Investing in real estate is another way high-net-worth individuals can make the most of their wealth. Real estate investing can take many forms, such as buying and renting out a property, flipping houses, or investing in real estate investment trusts (REITs). Real estate can provide a passive way to grow your wealth through rental income or appreciation in value over time. It can also provide diversification to your portfolio by adding an asset class that is not highly correlated with the stock market. 

However, real estate investing can be complex and requires careful research and analysis. You must understand the local real estate market, the costs and risks involved, and have a solid investment strategy before taking on real estate, so this tip won’t work for everyone. Consider working with a financial advisor or real estate professional to help you make informed decisions.

Invest in Yourself

Lastly, consider investing in yourself as a way to make your money work for you. Whether it’s learning a new skill, taking a course, or pursuing further education, investing in yourself can improve your earning potential and help you achieve your financial goals. By continuously developing your skills and knowledge, you can become more valuable to employers or clients, increase your income, and build a stronger financial foundation for yourself. 

Additionally, investing in your health and well-being through exercise or nutrition can lead to long-term savings on healthcare costs and improve your overall quality of life. Be sure to prioritize investing in yourself as part of your overall financial plan.

Ready to Make Your Money Work for You?

Building wealth and making your money work for you may seem overwhelming, but with a comprehensive approach and the right mindset, it can be achieved through manageable steps. As a high-net-worth individual, it’s crucial to work with a team of advisors who understand your financial goals, risk tolerance, and unique situation. At Balboa Wealth Partners, we’re here to help. Give me a call at 949-445-1465 or email me at [email protected] to get started today. (Scottsdale office: 480-801-5100, [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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SVB & Signature Bank Collapsed: Why Banks Fail & How to Protect Your Savings

By Jeff Gilbert

Banks play a vital role in the economy, providing individuals and businesses with access to cash, credit, and other financial services. Despite their importance, however, banks can fail. And when they do, the effects often cause panic in the wider economic environment. 

This past week, two major players in the banking industry, Silicon Valley Bank and Signature Bank, collapsed after they had trouble raising capital to meet the demand for deposits. While there are several reasons why experts believe these failures are not part of a more significant economic crisis, everyday investors are still understandably worried. These were the second and third largest bank failures in U.S. history, behind only the collapse of Washington Mutual in 2008.

Thankfully, there are safeguards in place that make it highly unlikely that clients will lose their entire life savings, even in the event of widespread banking failures. In this article, we explore why banks fail, what insurance protections are in place, and the safety of your savings.

Why Do Banks Fail?

Banks can fail for several reasons, including undercapitalization, liquidity issues, safety and soundness concerns, and fraud. 

  • Undercapitalization occurs when a bank has insufficient capital reserves to cover ordinary business expenses or meet regulatory requirements, which leaves it vulnerable to financial shocks. For instance, a bank that has issues generating cash flow or accessing financing in the form of debt or equity may find itself undercapitalized.
  • Liquidity issues arise when a bank lacks sufficient cash or liquid assets to meet its obligations, which can happen when a large number of depositors withdraw their funds all at once.
  • Safety and soundness concerns occur when a bank engages in risky lending practices, such as offering subprime loans or investing in volatile assets. This was a big issue during the 2008 financial crisis when several major banks failed due to their investments in subprime mortgages. 
  • Fraudulent activities, such as embezzlement or insider trading, can cause significant financial losses for a bank and erode depositor confidence. 

Banks that fail to manage these risks effectively may become insolvent and ultimately fail, jeopardizing the stability of the financial system and the broader economy.

What Happened With SVB & Signature?

SVB and Signature Bank both failed due to liquidity issues stemming from what’s known as a bank run. A bank run occurs when a large number of depositors withdraw their funds from a bank over a very short period of time (usually days). Because banks invest the cash deposited with them, a high demand for withdrawals can force the banks to sell off investments at a poor market price in order to meet the liquidity need. Consistently selling assets at a substantial loss can exacerbate liquidity issues and quickly cause a bank to become insolvent. 

Silicon Valley Bank almost exclusively served tech start-ups and venture capital-backed clients, which were particularly hard-hit during the economic volatility of 2022. As financing started to dry up for tech companies and venture capitalists couldn’t come up with additional funding, clients began withdrawing funds from their accounts at SVB to meet the operating expenses for their businesses. SVB was forced to sell billions of dollars’ worth of long-term Treasury bonds (initially bought when rates were near zero) at a massive loss to raise capital. This spooked other depositors, many of whom had accounts well above the FDIC-insured limits, and caused them to withdraw their money at an unsustainable rate. SVB could not meet their deposit requests and attempts to raise capital or sell the assets to a healthier bank were unsuccessful. The FDIC quickly stepped in as receiver and took over operations to prevent further damage.

A similar story unfolded at Signature Bank, which served mostly crypto investors. Similar to the depositors at SVB, many of the accounts held at Signature Bank were well above the FDIC-insured limits. Spooked by the failure of SVB, depositors at Signature Bank withdrew over $10 billion on Friday, March 10th. By Sunday, March 12th, the bank was taken over by the FDIC to protect the stability of the U.S. banking system.

What to Expect From Other Banks

While the effects of the SVB and Signature Bank failures are hard to predict, the FDIC has reacted swiftly to prevent further damage. Regulators have invoked a “systemic risk exception” which allows the government to reimburse uninsured depositors. The Fed has also set up an emergency lending program to provide funding to eligible banks at risk of bank runs. 

So far, small and midsize banks are at the most risk since they tend to focus on niche clientele who are more susceptible to industry-specific risks. Shares of regional bank stocks took a beating on Monday, March 13th, as investors tried to process the news of SVB and Signature Bank. First Republic Bank was down over 60%. Larger banks, including Wells Fargo, Bank of America, and JPMorgan were less affected, falling just 7%, 3%, and 1%, respectively.

What to Know About FDIC & SIPC Insurance

Despite the uncertainty surrounding the health of the overall banking system, there are safeguards in place to protect depositors and investors from losing their hard-earned savings.

Both the Federal Deposit Insurance Corporation (FDIC) and Securities Investor Protection Corporation (SIPC) provide insurance to preserve your assets. 

FDIC Insurance

The FDIC is an independent U.S. government agency that was established in 1933 to insure bank deposits. The FDIC insures deposits up to $250,000 per depositor, per account ownership category, per bank. This coverage includes checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs) issued by FDIC-insured banks.

SIPC Insurance

SIPC is a non-profit organization established by Congress in 1970 to protect investors against losses due to broker-dealer failures. SIPC provides up to $500,000 in insurance per customer for cash and securities held by a broker-dealer. This coverage includes stocks, bonds, CDs, and mutual funds held in a brokerage account.

It’s important to note that SIPC insurance does not protect against losses due to market fluctuations, but only in the event of broker-dealer insolvency or fraud. SIPC insurance also does not cover investment losses incurred by the customer, nor does it cover non-securities such as commodity futures contracts or currency.

How to Safeguard Your Savings

Not all banks and broker-dealers are FDIC or SIPC insured, so be sure to double-check the status of your accounts and consider relocating your funds if your bank or brokerage is uninsured. Additionally, not all account types are eligible for FDIC insurance. Stocks, bonds, and mutual funds are account types that are not eligible for FDIC coverage, and commodity futures and currency contracts are not eligible for SIPC insurance.

Additionally, both FDIC and SIPC insurance have limits to their coverage. The FDIC insures up to $250,000 per depositor, per account ownership category, per bank, while SIPC insurance provides up to $500,000 in coverage per customer. Keep in mind that joint accounts are considered a separate ownership category, which means that each account holder is insured up to $250,000 under the FDIC program.

If you have accounts with multiple banks or broker-dealers, make sure your deposits and securities are spread out in a way that maximizes your insurance coverage. Remember to regularly review your account balances and adjust your accounts as necessary to ensure you are within the coverage limits. By knowing the coverage limits and eligibility requirements, you can make informed decisions when choosing where to deposit your money or invest your securities.

How We Can Help

If you’re worried about the recent bank failures and how they might impact your finances, don’t hesitate to reach out to us for guidance. Our team can help you understand your options and develop a plan to protect your assets, minimize your risk, and provide advice on FDIC and SIPC insurance. Give me a call at 949-445-1465 or email me at [email protected] to connect with a financial planner who can help you preserve your financial future.

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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Leave a Lasting Legacy: What Inheritance Are You Passing On to Your Kids?

By Jeff Gilbert

When we think about the legacy we want to leave for our children, it goes beyond just money. We want to make sure our gift to them provides stability for many years. We don’t want to pass on a jumble of assets, debts, and documents that can take a long time to untangle.

Passing wealth on to your children can be a difficult transition, and you want it to be as stress-free as possible. Estate planning can help keep your children from having to face the extra burden of navigating a complex inheritance process while also dealing with grief and making difficult decisions. Helping them experience a smooth and organized inheritance process can be a great gift.

The Importance of Estate Planning

Estate planning should be an integral part of your financial and retirement planning. Failing to have an estate plan may not have a significant impact on your own life, but it will undoubtedly affect the lives of your loved ones after you’re gone.

In the absence of an estate plan, your death will be considered intestate, which means there was no valid will in place at the time of your death. The state in which you lived will determine who inherits your property through a process called probate, which can take anywhere from 6-9 months or even several years without proper planning. 

In addition to this process lasting a long time, your inheritors may face expensive fees, predatory claimants, and loss of control over what happens to your estate. Probate can cost up to 3-7% of your total estate value. And because this process becomes public information, this means that greedy creditors or estranged relatives may attempt to claim portions of your wealth.

Good estate planning mitigates these risks and provides your family with a secure plan for how your wealth will be transferred. The professionals in your life, such as your estate planning attorney and financial advisor, can become trusted resources for your family to lean on during this difficult transition.

Create a Lasting Legacy

Additionally, good estate planning incorporates legacy planning, which can be even more beneficial to your inheritors. Legacy planning allows you to incorporate family or financial values into your wealth transfer. If your children aren’t as adept at money management or have made financial mistakes in the past, your legacy planning can help guide them through what to do with their new wealth. Finally, legacy planning may help to protect your grandchildren and encourage generational wealth-building for decades to come.

Set Your Heirs Up for Success

It’s important to consider what legacy you want to leave for your children. The last few years have shown us that the future can be unpredictable, so it’s wise to plan ahead. Even though we may not want to consider our own mortality, having a plan in place can bring some reassurance to our families.

Allow your family to benefit from your legacy by partnering with Balboa Wealth Partners. Our team is committed to helping clients make the most of their finances. We are dedicated to providing guidance and support that will empower you and your family to make financial decisions with clarity, peace, and confidence. 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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5 Investment Trends to Watch in 2023

By Jeff Gilbert

With all the market volatility, rising interest rates, and persistent inflation we saw in 2022, many investors are wondering what they should expect from the markets in 2023 (and beyond). While we can’t predict exactly what will happen, we can share some investment trends that are gaining popularity as part of our collection of financial insights. 

Here are 5 investment trends to watch in 2023 so you don’t get caught unprepared.

Gold

Gold is one of the most traditional investment options out there, especially during times of volatility. Investors flock to gold in times of turmoil because it is seen as a safe haven from the equity markets. Gold also has typically had a negative performance correlation with stocks; as a result, investors see it as an excellent way to provide diversification protection to their portfolio. Gold has traditionally maintained its value over time and is a stable long-term investment. Investors also use gold to help protect their portfolios from the effects of inflation. 

Though gold did not perform as well as expected in 2022, it has a chance to rebound in 2023. Because the volatility of this past year is expected to continue throughout 2023 as many investors worry about a recession, gold could see renewed interest as an investment trend. 

ESG Investments

ESG investing has been gaining popularity over the last several years, and it looks like this trend will continue heading into 2023. ESG investing is a strategy that reviews the environmental, social, and governance practices of a specific company and assesses how those practices might impact the company’s performance in the stock market. ESG aims to examine the total ethical impact of an investment and align investors’ portfolios with their moral values.

It should be no surprise that ESG popularity is driven in large part by younger investors. In fact, nearly 8 in 10 millennial investors rank ESG investing as a top priority in their portfolios and 82% of Gen Z investors already have some exposure to ESG investments.

What’s more, ESG-related investments managed by advisors are projected to grow to $33.9 trillion through 2026, which would outpace the asset management industry as a whole. It’s clear that there is a growing demand for these investments as there has been a corresponding movement in recent years to look beyond just ourselves and consider the impact we’re making on the people and the world around us.

Renewable Energies

Similarly, renewable energy sources like solar, wind, and hydropower are growing investment trends to watch in 2023. As everything from fuel shortages, supply-chain disruptions, rising costs of fossil fuels, and a global climate crisis threatens the traditional ways we produce and consume energy, renewable energies will become essential in the future.

It’s estimated that climate change alone could reduce global economic output by as much as $23 trillion over the next 30 years. As the renewable energy sector continues to grow, this is a trend that investors can take advantage of through alternative-energy ETFs.

Recession-Resistant Industries

With continued rising interest rates and the persistent threat of inflation, there has been constant talk of a looming recession—so much so that according to an October 2022 Wall Street Journal survey, 63% of economists are now forecasting a recession and major job losses sometime in 2023, up from 49% in July.  

This suggests that recession-resistant industries will experience renewed growth in 2023 as investors prepare for the possibility of a sustained economic downturn. Sectors like healthcare, utilities, and consumer staples are typically defensive and do not react as much (or at all) to recession-related volatility. This is because demand for these products and services remain relatively consistent despite economic turmoil. 

Bonds

The overall bond performance in 2022 has not been great. In fact, it could go on record as one of the worst years in history in both the size of the losses (over 16% down) and the range (nearly all bond funds of every type have declined). But the outlook for bonds is improving and the asset class could make a rebound in 2023. For the first time in decades, bond yields are close to what you would expect from stocks. This means there is a potential to make more money in bonds in the upcoming year. 

The current market environment presents an interesting opportunity to buy bonds at significantly discounted prices. Despite the volatility, the outlook for bonds could be more optimistic in 2023. Bond yields and interest rates are up, while prices are down, making greater exposure to bonds an attractive option for many portfolios.

Talk Through These Trends With a Professional

Deciding what to invest in is never as easy as following the latest investment trends. Instead, you should discuss these (and other investment trends) with a skilled financial advisor who understands your unique needs and goals. At Balboa Wealth Partners, we specialize in serving high-net-worth and ultra-high-net-worth families as they navigate their complex planning needs. To get started, give me a call at 949-445-1465 or email me at [email protected]. Or complete a complimentary risk assessment here to learn more about your risk tolerance.

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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Don’t Let 2023 Catch You Unprepared: Review Your Financial Plan

By Jeff Gilbert

Every new year brings with it renewed energy and commitments to improve—not just yourself, but improving your finances, strengthening your savings, and planning for the future. At Balboa Wealth Partners, we believe that even though the ball has already dropped, it’s not too late to jump-start your financial plan for 2023. Use this guide to review each area of your financial plan and make sure you’re starting the new year off on the right financial foot. 

Retirement 

Maximize Your Retirement Savings

Be sure to max out your retirement contributions for 2022 prior to April 15th of 2023. Many employers offer retirement plans like 401(k)s, 403(b)s, and 457s, which allow you to contribute up to $20,500 annually for 2022 ($27,000 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. If you still haven’t maxed out your contributions with salary deferrals, consider making additional contributions prior to April 15th. With this strategy, you can defer taxes until your retirement years when you could potentially be in a lower tax bracket. 

Contribute to a Traditional 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. The 2022 contribution limit for traditional IRAs is $6,000 with additional $1,000 catch-up contributions for individuals over the age of 50. Contributions can be made until April 15th, 2023 for the 2022 tax year so there’s still time to utilize this strategy. If you’ve already maximized your 2022 contributions, start contributing for the 2023 tax year.

Understand Your RMDs

Starting in 2023, the rules around required minimum distributions (RMDs) will change 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.

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 2023. 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. 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 2022, like a birth, marriage, or divorce, now’s the time to update your 2023 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.

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. If your deductions fall below this amount, consider bunching your giving or 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. 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!

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 2023, 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 unprecedented market volatility throughout 2022, 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 2022 tax year has passed, there will likely be ample opportunity to revisit this strategy in 2023. 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 2023. 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 2022, like a birth of a child, marriage, divorce, or a death in the family, make sure you review your beneficiary designations for 2023. 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 2023, 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. 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

We know this list might tempt you to feel a little overwhelmed. But don’t worry—we’re here to help. At Balboa Wealth Partners, we have the tools and expertise to help our clients get their financial house in order. 

As your guide to financial independence, we provide personalized plans designed to match your needs and goals. Serving as your financial stewards, our team of advisors work with you to plan for your future while managing and preserving your wealth. Give me a call at 949-445-1465 or email me at [email protected], or reach our Scottsdale office at 480-801-5100 or [email protected] to set up a complimentary get-acquainted meeting so we can see if we are a good fit! 

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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Balboa Wealth Partners Wishes You Happy Holidays!

By Jeff Gilbert

Happy Holidays from our team at Balboa Wealth Partners! After another tumultuous year, you can be certain that one thing that never wavers is our gratitude for clients like you. We appreciate your trust in us and the opportunity to serve as your guide to financial independence. It is our goal to help you feel confident in your future and prepared for whatever the future holds. Our hope is that you will ring in this holiday season with peace and joy, knowing that we’re here to watch over your finances.

Reflecting on 2022

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 we are stronger for it! Rising inflation, continued stock market volatility, and recession concerns are still on the horizon, but we have high hopes for 2023. 

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 2023

We hope you are excited for everything the new year will bring, and we encourage you to think about what you want 2023 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 2023. Here’s wishing you joy and laughter during the holiday season and a happy new year!

Let’s Connect

Don’t let financial stress or anxiety keep you from fully enjoying this special season. We’re always here to help. To check in on your financial plan before the end of the year and make sure your finances are prepared for a successful 2023 and beyond, reach out to us by calling at 949-445-1465 or emailing me at [email protected]. We look forward to hearing from you!

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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Your End-of-the-Year Checklist for Small Business Owners

By Jeff Gilbert

It’s hard to believe that another tax season is just around the corner, but 2022 is almost at an end. With a lot of the pandemic-era programs petering out, it’s important to know what lies ahead to be prepared for what’s to come. 

Looking for a checklist to help minimize your tax burden and start 2023 off ahead of the game? Here are five items to review now to help wrap up 2022.

1. Review IRS Elections (Especially if You Had a Net Operating Loss)

If you had a net operating loss (NOL) this year, double-check your IRS elections to ensure you made the correct ones. This is one of the biggest issues our CPAs see when they help small business owners file their taxes. 

All these decisions play a role in how much money your business may owe in taxes. Talk with a CPA or financial professional about which elections may be right for you.  

Additionally, how you structure your small business can make all the difference in the world when it comes to taxes. A tax professional can help you decide which entity type is the best for your business and help you apply before the deadline hits. 

For example, let’s say you found out you could save more in taxes by structuring your business as an S corporation instead of an LLC. If you’re a new business, you have two months and 15 days from the day you file your articles of formation to file your S corp elections. So, if you filed your articles of formation on March 1, you have until May 16 to file your S corp election for it to take effect that same tax year. 

2. Review Your Deductions

The CARES Act brought about major tax incentives to people who donate to charity in 2020 and 2021, but the provisions of this Act have not been extended to 2022. This means you can no longer write off up to $300 in cash donations from your tax return if you take the standard deduction. And itemized charitable deductions are once again capped at 60% of your adjusted gross income for cash donations made. If you were planning to take charitable deductions in 2022, be sure to review them carefully to make sure they meet new requirements.

There are still deductions available for basic business expenses and these can help reduce your taxable income significantly. Some common examples of business expenses include:

  • Advertising
  • Legal and professional fees
  • Office expenses, including costs related to the business use of your home
  • Business use of your vehicle
  • Continuing professional education
  • Memberships to professional organizations 

Tax-deductible business expenses need to be ordinary and necessary to operate your business. Consult your tax professional for more details on qualified business expenses. 

3. Review Depreciation 

New depreciation rules have come into effect in recent years due to the Tax Cuts and Jobs Act (TCJA). These changes allow you to write off most depreciable assets “in the year they’re placed into service,” according to the IRS. 

Common items you can write off for depreciation include computers, equipment, machinery, cell phones, buildings, office furniture, and vehicles, as well as intangible items like copyrights.

Make sure you keep a list of everything that counts as a depreciable expense. Doing so will help you lower your business’s taxable income.

4. Check Eligibility for Company Retirement Plans

There are several different tax-advantaged retirement plans available to small business owners, including the solo 401(k), the SEP IRA, and the SIMPLE IRA. A solo 401(k) is designed for business forms with only one employee, the business owner, whereas SEPs and SIMPLEs can be used for businesses with more employees, though SIMPLE IRAs are capped at 100 employees.

According to the IRS, an employee can participate in a SEP IRA if they:

  • Are at least 21
  • Have worked for the employer in at least 3 of the last 5 years
  • Received at least $650 in 2022

Business owners can choose to be less restrictive than this and allow other employees to participate in a SEP, but you can’t be more restrictive than these IRS rules allow.

Review your SEP IRA eligibility requirements to ensure employees can participate in the program if you want them to. 

Choosing to add an employer-sponsored retirement plan to your company can be a great way to take advantage of tax credits, including those for setting up a new plan and auto-enrolling employees. You may also be eligible for additional tax deductions by making qualified employer contributions on behalf of your employees. It’s important to review your options with a qualified financial professional before making a decision on a retirement plan as each plan type comes with its own unique benefits and drawbacks. 

5. Review New Due Dates & Filing Methods for 1099s

Starting in 2020, any freelancers or contract workers who earned more than $600 from your company will receive Form 1099-NEC instead of 1099-MISC. NEC stands for “non-employment compensation”—and it’s only used for reporting independent contractor income. 

1099-NEC forms are due on January 31. If this day falls on a weekend, they’re due the following business day.

How We Help

At Balboa Wealth Partners, we have a diverse team of experienced professionals who maintain a high-touch, personalized experience with our clients. We seek to serve as our clients’ most trusted financial consultant and help them make smart decisions with their money. By having a dedicated team of experts on your side, we hope you can feel more confident as you navigate life’s challenges and planning opportunities. If you would like to learn more, 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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3 Tips to Make Your Money Last a Lifetime

By Jeff Gilbert

You’ve got big plans for your retirement. But nothing spoils a happy retirement more than the fear and anxiety of running out of money. Every retiree wants the comfort and confidence of knowing their retirement funds will allow them to check off every item on their bucket list. Nearly 56% of Americans worry they’ll outlive their retirement savings, so it’s more important than ever to make sure you’re prepared. 

Of course there’s no quick-fix guarantee you will never run out of money, but there are certain steps you can take to maintain your wealth and improve your financial stability. Rather than worrying about running out of money in retirement, take these 3 steps to make your money last a lifetime.

Diversify Your Income

A great way to make your retirement funds last is to diversify your income. The truth is, no matter what your net worth, your income will always be your greatest wealth-building tool. That’s why a solid income stream is great, but multiple streams of income are even better. 

Diversified income streams act in much the same way that diversified investments do. They allow for less demand and stress on any one income source, so that if an unforeseen event were to occur, the remaining income streams can pick up the slack. There are many ways to diversify your income, including:  

  • Invest in real estate. Owning rental properties is a great way to earn passive income without dipping into your retirement savings. Real Estate Investment Trusts (REITs) are another popular option.
  • Continue to earn active income. You could also pursue a passion, become a freelancer, or work for a nonprofit. You will earn less than what you’re making now, but all these options will provide flexibility and a form of income diversification that will keep your retirement savings intact for longer.
  • Use dividend-paying stocks. Often considered an annuity-like cash stream, dividend-paying stocks give company earnings to investors, typically once a quarter. The top dividend-paying stocks even raise their payouts over time. This not only gives you an income stream, but you can also reinvest the dividends to pursue more growth.

Avoid Overspending & Invest for Growth

Do you know what you will do with your newfound freedom in retirement? Many people start by pursuing all the things they didn’t get to do while working—traveling the world, picking up a new hobby, remodeling their home, and the list goes on.

But many people underestimate the amount of money they’ll spend in those first few years of retirement. With so much extra time on your hands, it’s easy to make a lot of little purchases that add up over time. Avoid overspending by creating a detailed (but realistic) budget for your retirement years. You can budget for extra expenses like vacation or pursuing a new hobby, but make sure you know how it will affect your nest egg before you follow through.

In addition to budgeting, another strategy for making your retirement income last is to invest excess cash for growth (stocks) instead of fixed income (bonds). This may sound counterintuitive since retirees tend to invest in more conservative investments to maintain steady income. But as bond yields remain historically low and inflation reaches new highs, many experts have expressed concerns over the sustainability of retirement investments that have a larger allocation toward bonds.

You certainly need the fixed-income component, but it’s important to consider including investments that have a greater growth potential in order to keep up with inflation and maintain your ability to withdraw funds every year. 

Make sure you are investing with the proper perspective, and don’t cheat yourself out of years (or even decades) of potential growth. 

Create a Withdrawal Strategy

When it comes to withdrawing from your retirement accounts, how you take your distributions can make all the difference. Your retirement income sources are likely produced from a variety of assets, including employer-sponsored retirement plans, Social Security, personal IRAs, or other income-generating investments. Each asset has different tax characteristics, and properly structured investments can help lower your tax burden if you plan how and when you’ll withdraw from each.

For example, most people will receive Social Security benefits during retirement, but 85% of your Social Security income can be taxed at your regular tax rate if your income exceeds a certain amount. 

Regarding your personal savings, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. Creating a withdrawal strategy and a tax plan can help you maximize your retirement funds and improve your financial situation.

We Can Help Make Your Money Last

Your situation is unique to you, so there’s no cookie-cutter answer to when you can retire or how much money you need to live a comfortable life. But there are concrete ways to improve your financial stability. At Balboa Wealth Partners, we’re here to help you achieve your short-term and long-term goals, worry less about your finances, and focus more on your life’s passions. 

If you would like to learn more about how to manage your money through retirement, we’d love to hear from you! Schedule an introductory appointment online, or call us at 949-445-1465. For any questions, feel free to reach out to 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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