Broker Check

Monday Money Report

| January 31, 2022

Last week was volatile, and continued the decline for the fourth week in a row. Economic data released on Friday, including some corporate earnings, consumer spending, and a key inflation measure known as the personal consumption expenditure will impact the market.

If you are still working, this downturn is a good thing.  With each paycheck that you are investing into your 401(k), TSP, or other investment plan, you are buying shares at a reduced cost. If you have taxable accounts, referred to as “non-qualified” because they don’t qualify for special tax treatment from the IRS, this is a time for loss harvesting, evaluating stocks you were holding due to high gains, and investing cash in the portfolio.  Look to these drops as opportunities.

If you are near or in retirement, make sure your portfolio is designed to produce the income you need even when the market drops. Distribution portfolios look very different than ones designed for accumulation.

We’re also entering tax season, which means you need to pull together all your documents.  If you own a business, make sure your 1099s are issued. Paperwork you should gather includes your W2, any 1099s, the 1098 from your mortgage company, and receipts from charitable donations.  Medical expenses may be deductible, but only those over 7.5% of your Adjusted Gross Income, or AGI.  If you are taking the standard deduction, you are still allowed a $300 deduction for charitable donations, or $600 if you are married.

If you made capital improvements to your home, those are not deductible now. But save your receipts. They add to the tax basis of your house – the amount you’ve paid for the house – and you won’t have to pay taxes on that amount when you sell your home.

Your action item to take this week is to compile your balance sheet.  It’s a list of your assets, or what you own, and your liabilities, or what you owe. We prepare these annually for clients; it’s a great way to see the big picture, rather than the bits and pieces each account statement shows.

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Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.  This information is not intended to be a substitute for specific individualized tax advice.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.