Debbie has enrolled in a post-CFP educational course for a new designation called Retirement Income Certified Professional®. This program will enhance our knowledge of the latest academic and industry thinking about how to best create “retirement paychecks” for clients from their resources to help ensure that folks don’t run out of money in retirement. In future issues, we’ll describe some of the ideas offered by a variety of different academics and experts in this maturing field. We’ll also be integrating these techniques into our client services.
GFP Internship Program
Our annual summer internship program started a few weeks ago. Our intern David Benko is working on our social media outreach efforts to enhance our ability to provide timely and interesting updates of useful information to our clients and readers.
We are interviewing a few more candidates and hope to share our love of financial planning with the next generation of advisors.
Investment Policy Statements
GFP is rolling out updated Investment Policy Statements for all of our clients for whom we manage money (including at TD Ameritrade, TIAA, and Vanguard). Be on the lookout for an email inviting you to schedule a call with Debbie to walk through your investment preferences and risk tolerance, risk capacity, and need for risk, your time horizon(s) and goals for your money, as well as any questions or concerns you have about the markets and general economic climate.
Use our online scheduling tool to schedule your 30-minute investment call in July.
Planning for Tax Bills
Many people were surprised this year at what they owed in taxes. If you received a large refund or had an unfortunate case that you owed a big tax bill from under withholding, there are two things you can do: first, update your W-4 at work (check details in our previous issue), and second, ask us do a tax projection for you. For the latter we would need your most recent paystubs, most recent tax return and information on any changed you expect such as employment, charitable contributions, and medical expenses this year.
Both the Federal and state withholding forms can help you calculate what you should have withheld from your paycheck. If you are married, this might mean that you should complete the special worksheets for married couples as your tax bracket will be different from if you were single. Remember, your employer doesn’t know what your spouse earns and only withholds taxes as if it’s just you.
Social Security and pension earnings should also be evaluated each year for the correct withholding, particularly once you also are taking Required Minimum Distributions from IRAs and your income goes up. For individuals who were good savers, have a nice employer pension, and or waited until 70 for the enhanced Social Security benefits, you might find your tax bracket went up in retirement!
Fund of the month: Vanguard Real Estate ETF (VNQ)
Each month, we will spotlight one of the funds that we use in our client portfolios. Vanguard’s real estate exchange traded fund (VNQ) is a big favorite of ours. It is one of the most affordable real estate funds available, with an expense ratio of 0.12%. VNQ holds a large basket of US-based real estate investment trusts (REITs) and firms that manage properties and collect rent. REITs offer the primary benefits of real estate investing – diversification, dividend income, and an inflationary hedge- without the responsibilities of owning and managing property. REIT exchange-traded funds, which trade like a stock, offer an entry point to multiple real estate sectors in a single cost- and tax-efficient package. REITs are not stocks or bonds and therefore don’t follow in lock step with other asset classes. This is good when you want to reduce portfolio risk. It is important to note that interest rates have ticked up recently and may rise further. Higher interests rates may cause the REIT sector to struggle. On the other hand, if the Fed lowers rates this year, REITs will benefit. In the long run, we believe this fund will continue to be core component and add value to client portfolios.