Accretive Wealth Blog

You buy life insurance policies to provide for your loved ones after you are gone. If your estate is large, however, some of the insurance proceeds may end up going toward estate taxes—and that’s important because the estate tax rate is now 40%.

To shield the payout from your life insurance policy, you can set up an irrevocable life insurance trust (ILIT), which becomes the beneficiary of your life insurance and allows the proceeds to pass to your heirs without being subject to estate tax. Basically, the trust owns the policy. Continue reading “Irrevocable Life Insurance Trusts: A Valuable Tool You May Not Know” »

You may have heard of a CRUT, which is a rather unpleasant acronym that stands for charitable remainder unitrust. While the acronym may be unattractive, a charitable remainder trust can be a very valuable tool that high-net-worth individuals can use for estate planning, income generation, tax savings, and charitable giving.

Basics

There are a number of charitable remainder trusts and other trusts that allow you to pass on assets to a charitable organization, and the rules for each of them are quite complicated. Continue reading “So What Are CRUTs and What Can They Do for Me?” »

Diversifying your investments is as much common sense as it is investment science. You can diversify by investing across asset classes and by geographic regions. Asset classes include stocks, bonds, cash, real assets, and alternative investment strategies, and within those asset classes are other opportunities for diversification.

The price of stocks, bonds, and other investments don’t all move in tandem. The price of each stock is affected by a combination of different elements, including not just the company’s own performance and the health of the company’s industry but also consumer worries and the health of domestic and global economies. Continue reading “Diversification May Help to Reduce Risk” »

Can people become rational investors? Or is there something we do that prevents us from consistently making sophisticated financial decisions?

Human motives and fears are now being recognized as an inherent part of investor behavior. How people invest, what stocks or funds they select, and their attraction to risky investments are among the factors being examined to determine the path investors take between objectively evaluating financial advice and succumbing to psychological traps that cause financial losses. Continue reading “Making Rational Investment Decisions” »

Nobody can predict market behavior with any certainty, but we do think highly of the views held by the folks at Advisor Partners (AP), the firm that manages many of our clients’ assets. We had a conversation with Daniel Kern, president and CIO, and Gerard Cronin, portfolio manager, about the economy and their expectations of market behavior in the upcoming months. Continue reading “What’s the Market Going to Do Next?” »

It’s tax time again. While many high earners were aware that rate increases and new taxes went into effect for the 2013 tax year, the full impact won’t hit until they find out what their full tax liabilities are.

Here is a re-cap of the tax-rate changes:

The top federal marginal income tax rate for 2013 is 39.6%, up from 35% for 2012. This rate kicks in for all taxable income above $450,000 for a couple filing jointly, or $400,000 for a single filer (income below those amounts is taxed at lower rates). Continue reading “Be Conscious of Taxes When You Invest” »

Even though it can be emotionally difficult, establishing a trust is a very important estate planning tool that can protect your family’s assets and determine what they will receive after your death. Properly designed trusts can also reduce the tax impact on your estate and help avoid probate.

Your goal is to maximize the wealth you leave to your heirs, and trusts are an invaluable tool. We will take a quick look at some basic information about common types of trusts: Continue reading “Trusts and Wills Can Prevent Complex Estate Problems” »

You can save money for retirement with either a traditional individual retirement account (IRA) or a Roth IRA. Both offer valuable tax advantages, but there are significant differences between them. Tax season is coming up, so we thought it was a good time to look at those differences so that you can determine which type is right for you. Continue reading “Traditional IRAs and Roth IRAs: What’s the Difference?” »

We asked Advisor Partners, LLC, to give us their market outlook for 2014. Advisor Partners handles portfolio management for many of our clients. Here’s what CEO Daniel Kern told us:

Advisor Partners enters 2014 with a favorable outlook for equities, continuing the generally positive view we have had for the equity markets over the past two years. I would characterize us as “reluctant bulls,” similar to many advisors who have large allocations to equities but worry about a market correction. Our overall equity outlook has not changed dramatically as we enter 2014, but our outlook about the relative attractiveness of different equity asset classes has changed over recent weeks. Continue reading “What Will the Markets Do This Year?” »

Many of us delay putting together a living trust. Even if we have one, we have a tendency to view it as something we’ve completed, not as something we need to update regularly. In this post, we’re going to ask an estate planning attorney to tell us why a living trust is a very important document and why we need to make sure our living trusts are up-to-date. In future posts, we’ll look at other types of trusts that our clients and friends may find valuable. Continue reading “Living Trusts Are Living Documents” »

Some big changes to federal income tax rates went into effect this year. Investors, small-business owners, and high-earners could have a rude jolt when they file 2013 tax returns, so we’d like to explain the changes and suggest some steps you could take to minimize the burden.

Here’s a look at the changes in 2013 tax rates that we think will have the greatest effect on our clients and friends:

• The federal rate for long-term capital gains has gone up from 15% to 20% for a single person with taxable income above $400,000 or a married couple with income above $450,000. People in a 25% or 35% tax bracket will continue to pay 15%, while those in a 10% or 15% bracket do not have to pay capital gains taxes. Continue reading “Tax Rates Are Going Up—Are You Ready?” »

The news is full of stories about the Affordable Care Act—better known as Obamacare—but most of us don’t really understand what the law requires. In this blog, we’d like to give you some basic information about Obamacare.

If you have insurance through your employer, you’ll be able to keep it (and you’ve probably already noticed that some preventive services have been added over the last couple of years). If you’re on Medicare or Medicaid, you can stick with your existing coverage. Continue reading “How Will Obamacare Affect You?” »

Employers have various ways to offer retirement benefits to their employees—and to themselves. The amount that a retiree will receive from defined contribution options such as 401(k) and profit-sharing plans is uncertain; all that is certain is the amount that is contributed.

Another option is a defined benefit plan (DB plan). As its name implies, the retirement benefits that an employee will receive are defined by the plan’s formula. Plan formulas vary according to the company, but typically benefits are calculated by using individual factors such as salary and length of employment. Continue reading “Defined Benefit Pension Plans: Worth Considering” »

While we’re all happy to see gains in the value of our portfolios, we’re not so happy to pay capital gains taxes on them. In this post, we’ll discuss tax-loss harvesting, which can help investors reduce their capital gains tax liability. This may be particularly important for high-earners in 2013.

First, let’s examine how much of a burden capital gains taxes can be for 2013: Continue reading “Is Tax-Loss Harvesting Right for You?” »

Our clients and friends have been expressing a lot of interest in Sharia-compliant investing lately, so this week we would like to discuss the topic in greater depth than we did in our June blog posting.

We know that some Muslims have totally avoided investing in the stock market thereby missing out on the economy’s rebound. Accretive Wealth’s mission is to provide financial planning and investment advice that aligns with each investor’s beliefs and values, and we want to offer our Muslim clients ways to take part in economic growth through the markets without contravening Islamic values. Let’s begin by reviewing the basics. Continue reading “Islamic-Value Investing: A Closer Look” »

After all the recent headlines about the European fiscal crisis and the impending doom of the euro, investing in the European equity markets may sound like folly. Taking a closer look at the developed markets of Europe, however, we think we’re approaching a good time to buy their equities. We don’t think these markets are going to turn around overnight, but we do agree with Wall Street powerhouses such as Credit Suisse and Bank of America Merrill Lynch that European equity markets are a good bet for the future.

In this blog post, we’re going to take a look at the international markets represented in the MSCI EAFE Index. “EAFE” stands for Europe, Australia, and the Far East, but the index actually includes only the developed countries in these regions: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. Continue reading “European Equities Offer Promise” »

Our clients are concerned about where to invest during these volatile economic times. Should they seek the stable haven of fixed-income securities or should they go into the more volatile equity markets? And if they have the stomach for equities, should they flee from emerging market indexes that have seem to have lost their luster or should they stick with the US equity markets that have posted outstanding returns?

Here at Accretive Wealth, we believe the best long-term strategy for our clients is to remain with the domestic equity market but very gradually begin increasing their emerging markets allocation. We think emerging markets are somewhat undervalued at current levels and have more robust growth prospects in the long run. Continue reading “Why We Still Like Emerging Markets” »

Many individual investors wonder whether they should invest in “passive” index funds or in their actively managed cousins. In this post, we will take a look at the differences between them.

Index funds, whether exchange traded (ETFs) or mutual funds, are constructed to reflect the components of a market index, such as the S&P 500 or the Russell 2000. Their goal is not to outperform the selected index but to mirror its performance. These funds provide broad exposure to a market index by including a representative group of securities. Continue reading “Is Active Management Worth the Cost?” »

Whether you’re thinking of retiring soon or whether retirement is way down on your list of your priorities, it’s never too late—or too early—to investigate your options. In this post, we discuss some of the ins and outs of one of today’s most popular retirement plans: 401(k)s.

The 401(k) plan is named after the section of the U.S. tax code that governs it. It is offered through your employer and can provide you with tax-deferred savings, lower taxable income, and, in many cases, matching, or “free,” money from your employer. Continue reading “401(k)- A Path to a Healthy Retirement” »

These days, wealth managers are a dime a dozen (perhaps less, when adjusted for inflation).

So why should you turn to Accretive Wealth Management to meet your needs?

First, we pride ourselves on our independence. We answer only to our clients (and, oh yeah, to regulators) when determining financial plans and strategies. We are beholden to no large parent company, we have no ties to proprietary products, and we don’t make markets in stocks or bonds. So you have our complete attention. Continue reading “The Accretive Difference” »