FINSUM

FINSUM

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(New York)

Q1 Earnings are starting to roll in for many companies and this presents an opportunity…see the full story on our partner Magnifi’s site

(Beijing)

China is one of the largest gold consumers in the world, but the pandemic has…see the full story on our partner Magnifi’s site

Friday, 23 April 2021 15:32

Biden’s Big New Tax Announcement

(Washington)

Joe Biden jut rocked markets in a big way. Yesterday afternoon, Bloomberg reported that Biden was planning to increase the capital gains tax rate on the wealthiest Americans by double, or up to just under 40%. The same rate as income taxes. Market reversed very sharply, but have been strong today. The tax would only affect Americans earning over $1m per year, which is 0.3% of the population, but taken in conjunction with other proposals to change the basis for capital gains taxes as it concerns inheritance, this is another big step.


FINSUM: The full scale tax overhaul on the wealthy has begun in earnest. Inheritance taxes and now capital gains taxes look likely to soar, with the latter not only on the wealthy. Advisors need to be very mindful of these changes as they disproportionately affect those who employ financial advisors.

(New York)

There are a number of forces propelling annuities forward at the moment. Not only is their component of tax deferral getting more and more valuable given the new administration’s tax plans, but the need and desire to lock-in guaranteed income has grown over the last year. The single biggest force, however, is the US demographic trend. An astonishing 10,000 people per day are turning 65, and 16.5% of the population is now 65 or older. By 2030 all Baby Boomers will be over 65. That means this gigantic cohort is moving out of their wealth accumulating years and into their drawdown years. Many need guaranteed income.


FINSUM: A lot of advisors have an automatically negative reaction to annuities, but the market has improved a great deal in recent years, and for any clients they are a good option.

(New York)

Model portfolios are getting ever more popular for advisors. Not only do they help outsource some portfolio management, but there is such a wide variety of them that they can be tailored to many different plans. In some cases, there are almost too many! One area where they make a lot of sense is in tax minimization strategies. Biden and the Democrats look like to hike taxes considerably, and that fact coupled with ultra-low yields and highly variant financial situations in muni bonds, means there is a lot to gain from models in this area.


FINSUM: COVID affected municipalities in very different ways, and spreads to Treasuries are historically low, so there is a of risk. Nuveen is seen as a leader in the munis space, so a good place to start the search.

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