Supreme Court Says “NO” to Recent Tariffs
The Supreme Court released its decision, ruling that President Trump exceeded his authority when imposing tariffs under the International Emergency Economic Powers Act (IEEPA). It means that some $170 billion of collected tariff funds are in play one way or the other. While it is certainly possible for many companies to claim a refund, the government may be slow to respond. Even if the companies get the money, it isn’t likely to find its way back into the ultimate payor – the American consumer.
Many companies raised their prices to recapture part of the tariff costs. We don’t expect the prices to readjust. The Supreme Court did not eliminate all tariffs – just those that were imposed under IEEPA. The President wasted no time signing an executive order to impose a flat 10% tariff, which can last up to 150 days. Then, he turned around and signaled that he wants to raise it to 15%. We don’t know at the end of these 150 days if he can then do it all over again. In short, the confusion of tariffs continues and is not healthy for our economy or the markets.
Pressure on Social Security
The Congressional Budget Office (CBO) recently released a report that stated the number of new participants in Social Security and Medicare is going to grow faster than the general population between 2027 and 2036. Simply put, that means the number of people working to support Social Security and Medicare will further reduce the net cash flow of both programs. Longevity continues to increase along with modern medicine and better lifestyles while the costs for healthcare are growing faster than inflation overall. It is a perfect storm.
Higher Earners are Falling Behind on Their Debt Payments
More Americans are beginning to fall behind on their debt obligations, and the profile of those seeking help is shifting in a striking way. Creditcounseling agencies, which traditionally served lowerincome households, are now seeing a growing number of higherincome earners walk through their doors.
Today, the average client seeking assistance earns around $70,000 a year and carries nearly $35,000 in unsecured debt, about half of their annual income, according to the National Foundation for Credit Counseling (NFCC). Before the pandemic, those numbers looked very different: the typical credit counseling client earned $40,000 and held about $10,000 in unsecured debt, only a quarter of their income.
Mike Croxson, chief executive of the NFCC, describes the shift as “a disturbing move from discretionary debt to survival debt.” What makes the trend even more concerning, he adds, is that many of these borrowers are already enrolled in structured repayment plans designed to be manageable, yet they are still falling behind.
The strain isn’t limited to counseling clients. Across the broader economy, serious delinquencies on auto loans and credit cards are climbing to levels not seen since the aftermath of the 2008–09 financial crisis, signaling a deeper and more widespread financial vulnerability among U.S. households.
Americans With Higher Incomes Are Starting to Fall Behind on Payments – WSJ
Congratulations to Three Team Members at ProVise
ProVise Management Group announces that three team members passed the November seating of the CFP® exam, Christiana Dirks, Austin Nesci and Jonny Richmond. The CFP Board announced that 3,970 individuals registered as test takers and that 64% passed the exam.1
The process to CFP® certification typically takes 18-24 months to complete and requires candidates to complete the “4 E’s:” education, exam, experience and ethics.
- Complete a CFP Board Registered Education Program: Complete the certification coursework through a CFP Registered Program before you take the CFP® exam.
- Pass the CFP® Exam: Sit for the CFP® exam after completing your coursework.
- Hold or Earn a 4-year Degree: Earn your degree in any discipline up to 5 years after passing the CFP® exam.
- Demonstrate Financial Planning Experience: Work in a qualifying financial planning job before or after you take the CFP® exam.
- Meet the Ethics Requirements: For your final step, you must sign an ethics declaration and undergo a background check.
By passing the exam, Jonny and Christiana finished the final step to being CERTIFIED FINANCIAL PLANNER® professionals. Once Austin completes his experience element, he will join them as a CFP® professional.
CFP® certification is recognized as the standard of excellence for the financial planning profession and ProVise congratulates all three of these rising stars.
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[1] https://www.cfp.net/certification-process/exam-requirement/about-the-cfp-exam/scoring-and-results/exam-statistics
Tax the Rich
While several states are considering how to institute a “wealth tax”, we thought it would be a good idea to look at those states that already have a high-income tax rate. In Florida, our constitution prohibits an income tax. Seven other states do not have an income tax: Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas and Wyoming. Here are the top ten based on the highest marginal rate:
10) Wisconsin – 7.65%
9) Vermont – 8.75%
8) Massachusetts – 9%
7) Minnesota – 9.85%
6) Washington – 9.9%
5) Oregon – 9.9%
4) New Jersey – 10.75%
3) New York – 10.9%
2) Hawaii – 11%
1) California – 13.3%
Should Investors Hang on to Loser Stocks?
Many investors have experienced hanging on to an underperforming stock that once had large upside potential. However, the company has not grown because of management missteps or changing market dynamics. Nonetheless, some investors find the notion of realizing a loss quite painful, but hanging on to a loser stock can sometimes do further damage to a portfolio.
Knowing when to sell an underperforming stock can be just as important as knowing when to buy a high quality one. Stocks can be volatile, and short-term underperformance shouldn’t be an automatic reason to sell. If a company is facing long-term headwinds or its financial health has deteriorated with no clear sign of recovery, investors should consider selling it. By doing this, your dollars can be put elsewhere into higher quality investments and keep your portfolio aligned with your financial goals.
Fortunately, selling a stock at a loss can have some surprising benefits. Through tax-loss harvesting, investors can offset taxable gains from other parts of their portfolio by selling their winners and losers within the same year. On the other hand, if an investor has losses that exceed their taxable gains, they can sell loser stocks and reduce their ordinary income by up to $3,000 every year until the entire loss becomes accounted for.
While investors might have behavioral biases that tell them to hang on to loser stocks, it’s critical to know when it’s time to throw in the towel. No investor likes to lose, but if realizing a loss can create tax benefits or keep them aligned with their financial goals, realizing a loss might not sound so bad after all.
Up Your Assets™ Podcast
Episode 27 – Your Money Isn’t the Only Target: Protect YOur Data, Home and Identity
In this episode, Ray Ferrara, CFP® discusses essential strategies for securing personal data with expert Kenneth Washington, who is the Chief
Information Officer at the Tampa Port Authority.
They cover a range of topics that are a little more “TECH” related to the Up Your Assets™ Podcast… including the importance of regular software updates, creating strong passwords, the necessity of multi-factor authentication, and securing home and office networks.
The conversation also delves into the use of public Wi-Fi, the role of antivirus software, identifying malicious emails, and the importance of data backup. Additionally, they explore home security technology and the considerations surrounding firearms for personal safety… don’t miss the boat on this one, listen today!
Acknowledgements and Important Disclosures
From the Up Your Assets website
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