Working with Integras Partners brings confidence to your financial journey. We help clients not worry so much about money, knowing that an expert is minding your investments.
Many individual investors let emotions and procrastination impact their decisions – hesitating to buy when prices fall and feeling eager to invest when markets are strong. A disciplined advisor provides steady, informed guidance to improve your financial outcomes.
August through October are historically the weakest and most volatile period for stocks and bonds alike. This year appears to be exceptional. Few expected the strength and resilience demonstrated by financial markets in the third quarter. The S&P 500 Index® posted a stellar 5.77% gain, posting year-to-date gains of 22%. Unlike recent years, the gain was not due to only a few large tech and communications stocks. We’re seeing overdue and much preferable broadening of stocks showing positive returns, and not just from the largest U.S. companies, but in small-caps and foreign markets as well.
The economy remains strong as the Fed begins its interest rate cutting cycle. Not too hot, and not too cold. Just like the story of a lost girl, everything is now “just right”. The Fed is done raising rates, employment strength continues, and economic growth is solid. These conditions amount to a “Goldilocks Scenario”, just about perfect to sustain corporate earnings growth and stock gains. Earnings growth should accrue to the value and small cap sectors, which until recently have lagged the large tech-dominated themes that were driving the market. At Integras Partners, we have been increasing our client allocations to these undervalued areas of the market for several months.
With lower relative prices, small-caps in particular should become even more attractive to investors, given that this Goldilocks scenario lasts for a while. We saw some confirmation of this in the third quarter as the lower P/E stocks began to outperform.
Integras Partners makes it easier to stay invested by actively managing client portfolios across our time-horizon strategies. We do this by keeping low-risk investments to provide for near term goals, allowing you more comfort with keeping longer-term investments intact through market swings. We can help you capture the long-term gains that volatile markets generate over time with less stress.
First, you may want to read our current market commentary. It details why the markets are particularly attractive right now. You can check it out here.
Employer retirement plans are often your greatest investment, for several reasons.
Funds tend to stay invested long-term, riding out down cycles to capture real growth
Salary-deferral investments made with every paycheck take advantage of market moves buying more shares when markets are down, and less when prices are higher.
Many employers match some contributions to help build your retirement funding.
Don’t limit your contributions to only capture your employer’s match.
Remember that Traditional 401(k) deferrals are pre-tax, so an extra $100 a month typically reduces your bi-weekly paycheck by only $32.
The 2025 contribution limit is $23,500. If you’re 50 or older, you can add another $7,500.
Do you still have money in a former employer’s plan?
Employers have greatly narrowed plan investment choices to avoid liability after the tech bubble of 2001.
Some plans restrict investment choices to “target date” and generic index funds.
If you’re retirement-minded, you can “rollover” an old 401(k)’s balance to an IRA without tax impact, usually getting greater freedoms in how you invest and spend your savings, including your own tax withholding choices.
Everyone wants their kids to succeed and help them financially. As always, starting early pays the greatest benefits. Here are some timely ideas:
529 plans allow you to invest cash for school expenses tax free. These accounts are typically owned by a single parent, with one beneficiary. They are state-specific and accept high contributions.
Almost all states offer income tax breaks for contributions to their state 529 plans.
Nine states offer tax breaks for investing in any state 529 plan.
Not all plans are created equal, with investment choices limited to that plan’s fund lineup.
Most plans offer target-date funds which are a good idea to align with HS graduation.
Distribution restrictions have broadened, now allowing up to $10K annual distributions for K-12, college apps and even exam-prep and computers.
You don’t want to greatly overfund the accounts and may want to pair a UTMA account (see below).
Once the accounts have been open for 15 years, you can move any remainders up to $35K into a Roth IRA for your child, once they are working. Funding is still subject to annual limits.
UTMA (Custodial) Accounts are irrevocable gifts to the minor but can accept gifted securities in addition to cash. Minors also have super low tax brackets which enable some passive gains to be realized tax free, or at a very low rate.
Funds can be used for almost anything for the benefit of the child
“Parental Expenses” are excluded, including food, clothes, etc.
Eligible expenses include cars, extracurricular activities, travel and Greek life.
They are considered assets of the child and will decrease financial aid eligibility.
This can be a great tool for gifting appreciated stocks or mutual funds, selling with minimal taxes and using the proceeds to cover those athletic or extra-curricular activities. I know it’s pretty sad
Grandparents and others can directly gift stocks to these accounts!
Glen & Amber are sandwiched between their elder parents and three children, ages 15-24. Glen has been managing their investments on his own and would like to retire from his corporate job. With family pressures complicating this decision, friends referred them to us for financial advice.
In our Discovery Meeting, we learned that Glen’s parents are in their late seventies and becoming less independent. His sister lives closest to them but increasingly frequent trips are straining her family. Amber’s parents are divorced; her dad and his wife are stable, but her mom is struggling with health and financial issues.
Seeking comfort for Glen’s career decision, we started with the family needs. Through our Generational Conversations program, we provided comprehensive information on care management options. Hiring occasional home caregivers who report to Glen’s sister proved to be a good solution. Amber’s mother moved into independent senior living at a reasonable monthly cost. She is now happier in a social setting and Amber is greatly relieved. The proceeds from selling her mom’s home combined with Social Security will keep mom financially stable for many years.
The couple’s elder daughter, Olivia graduated college with some 529 funds remaining, which we transferred to their middle child. Olivia is now largely independent with a first job, and gets occasional support from her parents.
In addition to increasing 529 contributions for the younger kids, we opened custodial (or UTMA) accounts. These are irrevocable gifts that a parent controls until the children reach their state’s age of majority. Unlike 529’s, they can receive annual gifts of stock and mutual funds and get a preferential tax rate on sales. Glen gifted some appreciated company stock which was promptly sold. The proceeds can immediately cover some extracurricular expenses and later fund college costs ineligible for 529’s like cars, Greek life and entertainment.
With family issues addressed, we narrowed in on the retirement conversation. We explored Social Security strategies. Glen also expects some consulting opportunities. We all agreed to start managing Glen and Amber’s investments right away. Our paradigm of aligning investments to match expected income needs brings comfort around retirement spending, while capturing growth with longer-term dollars.
Generational Conversations also supports adult children and their elder parents to plan for housing, legal strategies and security needs.
First, let’s look at the three types of accounts by their tax treatment.
Tax-Deferred Retirement Accounts are funded with untaxed dollars (contributions are tax deductible, either through salary-deferral or on your tax return). However, future withdrawals are fully taxed as ordinary income. Examples include 401(k)s and traditional IRAs.
Taxable Accounts are funded with after-tax dollars. Dividends and gains from sales receive preferential tax rates. Because you’re paying taxes in the years that income or sales occur, withdrawals aren’t taxed. These are usually mutual fund and stock accounts.
Roth Account contributions are not tax deductible. However, they grow tax-free forever, and withdrawals are never taxed.
It’s best to spread money across these three account types while you are working. This will give you some flexibility to manage your taxes in retirement, which could help your money last longer. Having different types of accounts also provides options for early retirees.
Optimal investment and withdrawal strategies are different for everyone. Factors include age, tax brackets, employer plan features, and investable income. Powerful retirement planning is best done well in advance and then annually while taking distributions.
Retirement planning is one of the most important things that we do for clients. We would be happy to discuss your situation and how we might be of service.
