The Federal Government’s Unlimited Checkbook
During the first 10 months of the 2023 fiscal year (ending this September), the federal government deficit reached $1.52 trillion. That is the bad news. We made progress because the deficit is 6% lower than last year. As long as we have a printing press, paper and ink, the Fed can print all the money it wants/needs. The Fiscal Data from the United States Treasury reports that we spent $956 billion paying interest on the national debt, up 32% from last year, with a weighted average interest rate of 3.3% or about 50 basis points from the year before.
It Ain’t So Funny
Did you hear about the U.S. citizen who was held hostage by a foreign government on bogus charges and returned home to find that the IRS was assessing penalties and fines for failing to pay taxes? Not much of a warm welcome home. It happened again with some of the folks who were part of a prisoner exchange with Russia.
Don’t blame the IRS entirely, as they do not have the power to waive fines and penalties. Congress must pass a law, and Senators Coons and Rounds have introduced a bipartisan bill called the Stop Tax on American Hostages Act of 2024 to solve the problem. Oh, yeah, that creates another problem. Nothing, even common sense, gets done in Congress. Ultimately, we are sure things will work out, but isn’t it ridiculous?
Good News Inflation is Low…Bad News Inflation is Low
In the grand scheme of things, the report this month on inflation being only 2.9% year over year was well received by the markets, leading into the Federal Reserve meeting in the middle of September and the expectation that interest rates will start to come down. Good news for consumers, but not so much for Social Security recipients as the expected increase for 2025 is now down to 2.6%. This is about an average increase. The increase for 2024 was 3.2%.
Divorce, Women, and The Financial Advisor
One of the many questions women face during a divorce is, “Should I continue working with the family financial advisor post-divorce?” Often, women feel a need for change, especially if their spouse has the principal relationship with the advisor. The financial advisor relationship that previously worked for a couple may no longer serve them as individuals, particularly for women who may have deferred to their spouse on financial decisions.
A UBS study found that 82% of women defer long-term financial decisions to their spouses, often due to their perceived lack of knowledge or interest. This dynamic unravels during divorce because women suddenly find themselves needing to make decisions they weren’t previously involved in.
Many women seek new financial advisors after divorce to regain control and confidence in their financial futures. Over the years, we’ve seen how divorce impacts emotions and financial stability.
A 2021 survey found that only 5% of women knew about using a financial advisor as part of their divorce team. In hindsight, 61% of divorced women regretted not using a financial advisor or a Certified Divorce Financial Analyst® in conjunction with their attorneys.
Divorce presents an opportunity for women to redefine their financial independence. Women should prioritize finding a financial advisor who listens, educates, and empowers them to make informed choices. In our experience, it is essential for women to foster a collaborative relationship where the advisor ensures that women feel engaged and capable of leading their financial lives.
Sources:
Women Don’t Consult Financial Advisors When They Get Divorced. Here’s Why They Should (forbes.com)
Men Still Make the Financial Decisions in Most Couples: UBS | ThinkAdvisor
If you divorce your spouse, you may want to break up with your financial adviser – MarketWatch
Making an Impact with ESG
What is ESG investing? ESG is a framework designed to look at the combination of the environmental, social, and governance risk factors that a company may present. It can be a way to incorporate personal values into your portfolio. Morgan Stanley Capital International (MSCI) is a firm that provides various investment data and analytics, including ESG ratings. MSCI assigns companies an ESG rating ranging from leaders (AAA, AA), average (A, BBB, BB) to laggard (B, CCC). Investors interested in the ethical impacts of their portfolio may consider investing in companies with a higher ESG rating. For example, an investor who is concerned about the environment may want to focus on companies that have an ESG rating higher than their competitors.
Investors could also consider specific ETFs that screen for companies within the S&P 500 Index that meet ESG criteria, creating an “ESG friendly” version of the S&P 500 Index. As we look back, investors in the ESG version of the market have had nearly the same experience as those who hold the large-cap market index. As a matter of fact, the risk-adjusted returns and industry sector exposure of both funds are similar and signal that the market might have already rewarded companies with a sustainable ESG rating. Ultimately, ESG ratings may be best utilized not as the fundamental base for an investment strategy, but more of an opportunity to align your portfolio with your values. If you want to learn more about ESG investing, please contact us.
Thinking of Adopting?
The number of people who want to adopt is not as great, unfortunately, as there are children who want to be adopted. Recognizing the societal need, the government offers financial incentives for adoption. The 2024 adoption credit for qualified expenses (adoption fees, court costs, legal expenses, travel, meals, etc.) is $16,810. Do more than just adopt – and adopt a special needs child – and get the full tax credit even if you do not run up all the expenses. 100% of these expenses are available for those with an income of $252,150 or less and it phases out after $292,150.
Do They Really Pay a Fair Share?
For the second year in a row, ProVise Management Group, LLC was recognized by Florida Trend Magazine as one of the best places to work in Florida. In the “Best Small Companies” category (15 to 49 employees), ProVise was one of 31 companies across Florida selected for this honor. We recognize that this honor really goes to our 30 team members who come to work daily to help our 1,100 clients with their financial planning and investment management needs. Thank you to each of them for the enthusiasm they bring to work every day.
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