Planned Solutions

In this episode of the Planned Solutions Incorporated Podcast, Summer jobs for teens are often low-level and low paying. However, they can be an important springboard that can be used to start a career on the right track and jumpstart a financial plan. Therefore, it is important to be prepared to take advantage of the career skills and learning opportunities that a part-time job may offer. Also, Oil prices have declined sharply in the past 12 months. After peaking at more than $120 in June 2022, oil prices have since trended downward falling below the $70 price point in June 2023. In addition, it appears that oil prices may continue to decline as suppliers have ramped up production following the pandemic which could possibly return prices to their pre-COVID level of $55 per barrel. And, The US debt ceiling debate is finally over but investors may not even take notice as they were not deceived by the purported danger to begin with. Despite the economic and financial brinks manship, the US stock market remain

In this episode of the Planned Solutions Incorporated Podcast, We decided to outsource our lead article to Google Bard this week. Google Bard is Google’s Artificial Intelligence Chatbot. We found that the article generated was mostly accurate, although not completely (see notation in the article), which raises concerns about misinformation or false information when relying on artificial intelligence. This highlights the need to audit any information received from these models to ensure their accuracy Also, Taxpayers often focus on income taxes, but there are other types of tax that can be just as important when it comes to tax planning and tax savings. Employment taxes (Social Security and Medicare taxes) can exceed 15% of income when both the employee and employer contributions are considered. Therefore, employment tax planning should not be overlooked when engaging in tax planning. And, The tax code offers several small tax credits for certain energy-efficient home improvements. However, these credits can

In this episode of the Planned Solutions Incorporated Podcast, Technology stocks have outperformed other sectors by a wide margin so far in 2023, helping to offset the large losses in Technology stocks in 2022. This has caused some investors to allocate a large percentage of their stock portfolios into this single sect or which may result in higher risks than they realize. Instead, investors may be better served by being patient and allowing time for the market breadth (number of shares increasing in value)to improve. Also, Banking turmoil in the US which began in March has continued to negatively impact the US financial system. However, the issues have been fairly contained within the sphere of smaller regional banks. Meanwhile, the Financial Stress Index reported by the Federal Reserve shows that financial stress spiked in March but has since improved sharply. And, One of the key decisions when creating a trust is who should be named as the successor trustee. Often those who set up a trust will appoint a

In this episode of the Planned Solutions Incorporated Podcast, The US economy grew just 1.1% in the first quarter, a lower growth rate than the prior two quarters. However, the report had a lot of positives with household spending up 3.7% and government spending increasing 4.7%. Meanwhile, investment expenditures were a drag on growth, down 12.5%, likely due to increased interest rates and the uncertainty of the current business environment. Also, US consumer sentiment is often cited as a leading economic indicator as it tends to change course before the stock market. In 2021 it peaked six months before the US stock market and in 2022 it bottomed four months before the market low. Today, consumer sentiment is signaling support for the current market recovery as the index continues to trend upward at 27% above its low from October And, Term life insurance policies are often very cost-effective but do come with a downside, unlike permanent insurance, that the policy term will end at some point in the future.

In this episode of the Planned Solutions Incorporated Podcast, The International Monetary Fund (IMF) has lowered its economic growth forecast in recent weeks but continues to predict positive growth rates for the majority of the globe. However, the expected pace of economic growth around the globe, as well as in the US, is fairly low compared to historical rates. This appears to be a middle ground between predicting a recession and predicting a return to more normal economic growth rates. Also, US inflation has declined for nine consecutive months from a high of 9.1% in June 2022 to just 5.0% in March 2023. Large contributors to the decline in the rate of inflation include food and energy prices, with energy prices turning negative. However, services price inflation remains high supported by shelter prices which now account for nearly half the headline inflation rate. And, Zero percent credit card offers, which allows the cardholder to borrow for a specific term, may be attractive for those looking to make

In this episode of the Planned Solutions Incorporated Podcast, Picking the right credit card often depends on how a cardholder plans to use the card. For most people who pay off their credit card balances each month the interest rate charged by the credit card should be the last consideration. Instead, it is advisable to weigh the rewards that the credit card offers against the annual cost of the card, such as any annual fees that the card may charge. Also, The number of existing homes sold in February increased 14.5% from the prior months as the Spring buying season appears to be heating up early. Home prices remain resilient, down just 0.2% from the prior year. It appears that declining interest rates have unlocked some demand from potential homebuyers as the level of interest rates, and not prices, have driven home demand in recent months. And, It is common for retirement account owners to list their minor children as beneficiaries of their retirement accounts. However, there can be some drawbacks to thi

In this episode of the Planned Solutions Incorporated Podcast, The recent bank run that caused three large banks to fail in the US this year is a classic case of a Prisoner’s Dilemma. A Prisoner’s Dilemma is a game theory concept that illustrates how the optimal strategy for participants may lead to a less-than-optimal outcome that leaves all involved worse off. Fortunately, the Federal Reserve in the US was created to be a lender of last resort to stop bank runs from spreading and impacting other institutions Also, The recent bank run in the US has caused two banks to fail and a third is under tremendous stress. A review of these banks shows that they were outliers in terms of poor risk management on their reserves as well as having a high percentage of deposits that were not FDIC insured. The remainder of large and mid-sized banks appear to have been far more conservative and are likely to be more resilient. And, With the recent bank failures, the Federal Deposit Insurance Corporation (FDIC) has been in t

In this episode of the Planned Solutions Incorporated Podcast, With interest rates are significantly higher than they were last year, this is a good time for savers to review their cash management strategies to ensure that they are maximizing the interest rates they are earning on their savings. This may involve shifting money to account types that pay higher yields, comparing the rates that are offered by different institutions, and ensuring that accounts are earning the highest amount offered by the institution. Also, Investment tax losses may allow taxpayers to claim a tax deduction on their income taxes. However, the impact of these losses is often somewhat muted. Tax losses are first used to offset taxable gains. Then up to $3,000 of any remaining net loss may be used to offset the taxation of other income. Finally, any excess unused losses are carried forward to the following tax year. And, When an individual passes away their non-retirement assets often receive a step up in tax basis. This means thei

In this episode of the Planned Solutions Incorporated Podcast, The US inflation rate declined slightly in January as goods prices continued to decline but services prices climbed. This will likely cause the inflation focus to shift from goods to services going forward as service prices will need to decline for inflation to return to its longer-term average. Within the services category, the cost of shelter is significant given the large percentage of household spending that goes to paying for shelter. Also, The Secure Act 2.0 made several changes to retirement plan catch-up contributions, including increasing the amount of the catch-up contribution for some savers. The amount of the catch-up allowed for IRAs will increase with inflation after 2024. In addition, in 2025 the catch-up will be increased by $10,000, or 1.5 times the normal catch-up amount, for those aged 60-63 saving in an employer-sponsored retirement account. And, Reverse mortgages have become more and more popular over the years as many home

In this episode of the Planned Solutions Incorporated Podcast, The Weekly Economic Index (WEI) is a high-frequency (updated weekly rather than monthly or quarterly) economic indicator that has a strong track record of predicting the pace of US economic growth. Currently, the WEI is forecasting slow economic growth but is not yet predicting a recession in 2023. However, the path of this index should be watched closely given the mixed economic signals from other data. Also, One of the new changes under the Secure Act 2.0 will require that high-income earners (those who earned $145,000 or more from their employer in the previous year) have their catch-up contributions allocated to the Roth option. This will make the additional contribution taxable to the employee even though the money will be allocated to their retirement plan rather than their paycheck. And, The electric vehicle tax credit has been expanded to include more makes and models. However, the new rules also come with some significant restrictions t

In this episode of the Planned Solutions Incorporated Podcast, Consumer prices have been in focus for the past several years as the Consumer Price Index (CPI) reported above-average increases in prices. However, what has been lost in this data is the even larger increase in the Producer Price Index (PPI) which measures prices paid by businesses for raw materials. This has caused profit margins to be squeezed as input prices increased faster than end prices. However, this pressure appears to be dissipating as producer prices have declined. Also, With home electricity prices having increased and Congress extending the 30% tax credit for solar panels, many people are once again considering investing in solar. In deciding whether or not to install solar it may be beneficial to determine the cost/benefit in terms of the time period it will take to break even and the time period that the solar panels are expected to last. And, The Secure Act 2.0 has expanded access to Roth accounts for many retirement savers

In this episode of the Planned Solutions Incorporated Podcast, the passing of the Secure Act 2.0 has made several changes to the rules governing retirement accounts. Among these changes is the change in the Required Minimum Distribution (RMD) rules which extend the age at which retirement account owners will need to take distributions to age 73 in 2023. The Secure Act 2.0 also solidifies and expands the rules related to Qualified Charitable Distributions (QCDs) which allows for direct contributions from taxable retirement accounts to a qualified charity. Also, There have been a lot of changes to student loan rules over the past few years which may not have been front of mind for borrowers subject to the payment forbearance. Therefore, 2023 may be a good year for student loan borrowers to review their student loan options, recertify their income for Income-Driven Repayment plans, apply for student loan forgiveness, and explore new tax-free student loan payment options. And, The Secure Act 2.0 has created

In this episode of the Planned Solutions Incorporated Podcast, Foreign stocks have outperformed US stocks by 12% over the past two months. This represents a major shift from what has been a long and fairly consistent period of higher returns from US stocks. This recent shift in returns is partially explained by a weakening US dollar compared to other major currencies. However, foreign stocks also appear to offer more attractive valuations than US stocks at this time. Also, The pace of existing home sales has plummeted in the US as higher interest rates have made homes less affordable for many buyers. However, prices have remained resilient, increasing 3.5% year-over-year. This shows a disconnect in the housing market as demand wanes but sellers are choosing to stay put rather than reduce the price, they will accept for their home leading to fewer and fewer completed sales. And, With interest rates continuing to rise it is important for households to make some changes to their spending patterns. The buy no

In this episode of the Planned Solutions Incorporated Podcast, The US inflation rate declined to 7.1% in November, the fifth consecutive month of decline. While food and energy inflation remain high year-over-year, both show shorter-term improvement with the pace of the increase in food prices declining and energy prices dropping in four of the last five months. Meanwhile, services prices have increased, but not by enough to offset the weakness in goods prices, which is a positive sign that inflation may continue to decline. Also, 2022 may be a good year for tax loss harvesting. With the difficult year in the financial markets, many investment holdings may have unrealized tax losses. These losses can be converted into realized tax losses, which can be deducted on an income tax return, by selling the investment and reinvesting the money into a different investment. And, The amount that an individual can give to another individual in a year without having to file a gift tax return will increase from $16,000 i

In this episode of the Planned Solutions Incorporated Podcast, The estimates of global economic growth have been revised several times in 2022 as the probability of a recession in the US within the next twelve months has increased to nearly 25%. It seems the best scenario is a period of very low economic growth, with the worst case is a period of economic contraction. However, this outlook for economic growth may already be reflected in market prices as investors may have incorporated these expectations into their estimates of future prices. Also, Cryptocurrencies were touted as an unregulated way for investors to hold and transfer funds in stark opposition to the highly regulated banking industry, which makes up the foundation of the international financial system. However, recent failures show that the lack of regulation has allowed cryptocurrency companies to repeat the same mistakes that led to the bank regulations they sought to avoid. And,The six-month rate of interest paid on Series I Bonds declined

In this episode of the Planned Solutions Incorporated Podcast, The stock market surged on November 10th in response to a better-than-expected inflation report. This has caused some to question how stock prices can be considered rational when prices sometimes swing by such large amounts in one day. The answer relates to the fact that investors are forward-looking, so they are constantly anticipating the future. However, the time frame investors use to price investments often changes over time. Also, The US inflation rate declined by more than expected in October. Consumer prices increased 0.4% for the month and 7.7% year-over-year. This was a 1.4% decrease from the peak of 9.1% in June 2022 led by a decline in energy prices. However, food prices have continued to increase, and the price of shelter has remained persistently high despite stagnation in home prices due to increased rents. And, In an effort to step-up tax enforcement, new tax laws have increased the reporting requirements for non-traditional sou

In this episode of the Planned Solutions Incorporated Podcast, The high rate of inflation throughout 2022 has resulted in large adjustments to a number of areas of the US income tax code. The number of tax deductions, the levels for each income tax bracket, and the income levels of tax credits are all adjusted upward for 2023. This will produce little change in tax rates for those whose taxable income has kept up with inflation but will likely produce tax savings for those whose income has not increased in line with inflation. Also, The US economy grew by an annualized rate of 2.6% in the third quarter, offsetting the declines reported in the first and second quarters. Consumer spending continued to the positive while private investment contracted sharply. Meanwhile, foreign trade was strongly positive and government spending once again turned positive. And, Social Security benefits will increase by 8.7% in 2023. This is the equivalent of beneficiaries receiving an extra payment in 2023 as their total annu

In this episode of the Planned Solutions Incorporated Podcast, With the mid-term elections around the corner, there is a lot of noise about the risks that it could pose to the markets and the economy. Much of this is political rhetoric as both parties make their case for political power or attack the other in an attempt to get their base excited to vote. However, the data shows that midterm elections have not been the big political risk some are trying to make it out to be and, in fact, have led to positive market returns over the next year regardless of the outcome. Also, 2022 has been a year in which investors have shunned investments to instead focus on spending for consumption. This explains why consumer prices are up and investment prices are down. However, it may also create an opportunity for those with a contrarian mindset who are willing to limit consumption at high prices and instead invest the savings to take advantage of today’s lower investment prices. And, Family gifts or loans may be a good

In this episode of the Planned Solutions Incorporated Podcast, The level of margin debt (money borrowed to invest in stocks) was at high levels in late 2021 creating a concern about the high level of short-term speculation in the stock market. However, since then, the amount borrowed to invest in stocks has declined sharply and is now in line with the long-term trendline. This could be a sign that the stock market is normalizing by correcting for some of the excesses that were built following the pandemic. Also, Interest rates have been increasing which is a bad thing for conventional mortgages. However, it may benefit borrowers to take out a reverse mortgage with a line of credit. This is because the limit on the line of credit increases at the same interest rate that would be applied to any balance on the loan. Therefore, the higher the interest rates, the faster the limit on the line of credit will increase over time. And, Higher interest rates have created an environment where many homeowners can earn

In this episode of the Planned Solutions Incorporated Podcast, The US stock market was unable to resume an upward trend in August as the market stalled out at the 200-day moving average trend line. Now the market is trading between its long-term trendline and the low for the year in mid-June. While these trends offer some indication of the market trends for the remainder of 2022 it is likely that important data such as Federal Reserve policy, economic data, and the upcoming earnings season will have a larger impact. Also, Inflation proved surprisingly persistent in August as declines in fuel prices were offset by increases in energy utilities, new car prices, and services such as shelter, transportation, and medical services. This may be an indication that inflation is shifting from the goods market largely driven by supply chain issues and costs to the services sector where higher wages may be forcing companies to raise prices. And, Individuals who participate in a non-covered pension (a pension that is ea