Featured entries from our Journal

Details Are Part of Our Difference

Podcast Episode – Meir Statman

With the Recent Events in Ukraine, Should I Make Changes to My Portfolio?

Embracing the Evidence at Anheuser-Busch – Mid 1980s

529 Best Practices

Category: Timely Topic

Three Timely Tax Tips

Around this time of year, taxes are near the top of just about everyone’s to-do list. At Hill Investment Group, we think about taxes every day of the year, working to maximize our clients’ after-tax returns. That means we not only try to maximize the returns in our clients’ portfolios but also limit the amount of money they have to pay in taxes.

Some of you may have already filed your taxes, and good for you. For those that have not already filed, below we share a few tips you can use to hopefully reduce the amount you send to Uncle Sam for 2021.

Contribute to your IRA: Saving in a traditional IRA is one of the simplest ways to reduce taxes. You can contribute up to $7,000 to a traditional IRA (if you are over age 50) and count it as a 2021 contribution to potentially reduce your income.

Contribute to a Health Savings Account: If you are covered under a high-deductible healthcare plan, a family can contribute up to $8,200 (if the owner is over age 55) to a Health Savings Account (HSA) and count it as a 2021 contribution. This is an often-missed opportunity. We were told by one CPA that if you can only contribute to your HSA or 401(k), they would pick the HSA for the tax benefits – quite an endorsement.

Charitable Contributions: Married couples can deduct up to $600 of cash charitable contributions even if they take the standard deduction. So, although you may not have other deductions, be sure to keep track of those cash gifts you made in 2021.

As with all tax planning, we recommend you connect with your accountant or CPA to get more information on your specific situation.

With the Recent Events in Ukraine, Should I Make Changes to My Portfolio?

There is no downplaying the news coming from Ukraine and Russia. While Russia makes up a small percentage of the overall global stock market (less than .25% as of February 23), Russia and Ukraine both play considerable roles in producing and supplying commodities such as liquid natural gas, wheat, etc.

What does this mean for you as an investor?

The situation is currently evolving. We know that political leaders from the West condemned Russia’s actions and vowed significant sanctions in response. Markets reacted with increased volatility, and some stocks retreated.

While no two historical events are the same, historical context is often helpful to put current events into context. The chart below illustrates the growth of a dollar invested in global equities alongside past crises. Think back to some of these events- it’s easy to remember how uncertain the future felt. Putting current events into this context helps us take the long view. The chart shows that markets rewarded disciplined investors for their grit. This chart is a good reminder of what it means when you invest for the long term, and the fortitude being demanded of us today.

Takeaways

  • It is rarely advisable to mix emotions and investing.
    History shows us that a critical ingredient of long-term investing success is having discipline in good times and in difficult periods. Markets have rewarded investors willing to tune out the noise and stick to their plan. So, we advise you to stick with yours.
  • Your systematic investing approach already adjusts to new information in real-time.
    Investors in global equity portfolios inevitably face periods of geopolitical tensions. Sometimes these events lead to restrictions, sanctions, and other types of market disruptions. We cannot predict when these events will occur or exactly what form they will take. However, we can plan for them. We do this for you by managing your diversified portfolios and building flexibility into our investing process.
  • Staying invested is the winner’s game.
    In good times and in bad. A recent report by Morningstar investigated how successful investors are when trying to time markets. Ultimately, the report concluded, “The failure of tactical asset allocation funds suggests investors should not only stay away from funds that follow tactical strategies, but they should also avoid making short-term shifts between asset classes in their own portfolios.”  Why? Missing out on a couple of the best-performing days wipes out your returns. And, to time correctly, you must be right twice – both when to get out and when to get back in.*
  • Diversification is the only free lunch.
    This quote attributed to Harry Markowitz as essential now as ever. We believe that the most effective way to mitigate the risk of unexpected events is through broad, global diversification and a flexible investment process. This philosophy allows you to ride the wave through any crisis, such as natural disasters, social unrest, and pandemics, limiting risky overexposure to any particular sector or market.
  • Take the long view.
    We don’t believe that this time it’s different, but instead the apocalypse du jour. You can be confident in your approach, your plan, and your team. We are here for you.

 

* Amy C. Arnott, “Tactical Asset Allocation: Don’t Try This at Home,” Morningstar, September 20, 2021.

 

Hill Investment Group may discuss and display, charts, graphs, formulas that are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. Such charts and graphs offer limited information and should not be used on their own to make investment decisions. Hill Investment Group is a registered investment adviser. This information is educational and does not intend to make an offer for the sale of any specific securities, investments, or strategies. Investments involve risk and, past performance is not indicative of future performance. Consult with a qualified financial adviser before implementing any investment strategy.

A Moment of Reflection: Something to Celebrate

This time of year, people are buzzing about New Year’s resolutions, guessing what the tax changes will be, and all sorts of anxiety-provoking topics.

But you, you’re different. Give yourself a huge pat on the back. You can congratulate yourself on checking the box on most, if not all, of your financial resolutions –  for this year and next! Why?

You’re a Hill Investment Group client. With that single decision, you get to delegate your worry to us, benefitting from:

  • A long-term, low-cost, tax-efficient, and globally diversified investment portfolio
  • A financial plan grounded in your personal goals, your family, the causes, and organizations that you genuinely care about
  • A disciplined, evidence-based investment strategy
  • Tax-aware investment moves made throughout the year
  • Planning strategies that maximize the value of vehicles and benefits available to you
  • Proactive strategies that guide you towards the legacy you hope to leave
  • And the list goes on!

So. Now what? By checking off all of the above, take a few minutes and think about those long-term goals, your family, your health.  What will you resolve to start doing or stop doing with this freedom? What can you do that will enhance your health span, your relationships, the odds that you’ll check off some bucket list items. Do that.

And while you do that, the Hill Investment Group team will continue to do our part to eliminate worry and deliver peace of mind. Our mission is to walk you towards a higher level of financial freedom. We thank you for making us part of your family. It’s great company to be in!

If you’re not a client and want to check off a few items on your New Year’s resolution list, call us or set up a time to get together…face to face or virtually. Cheers!

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Featured entries from our Journal

Details Are Part of Our Difference

Podcast Episode – Meir Statman

With the Recent Events in Ukraine, Should I Make Changes to My Portfolio?

Embracing the Evidence at Anheuser-Busch – Mid 1980s

529 Best Practices

Hill Investment Group