WrapManager's Wealth Management Blog

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug discusses strategies for tax efficient investing. Consider this Scenario: Your friend Elizabeth would like to donate to her favorite charity before the end of the year. Elizabeth is debating whether to donate appreciated securities or to donate by liquidating a different security at a loss (and realizing a tax benefit by doing so) and then donating the proceeds from the sale of that security. She owns $2,000 worth of ticker ABC at a cost basis of $1,500. She purchased this investment over a year ago. Assume that the appreciated stock is fully deductible. She owns $2,000 worth of ticker XYZ at a cost basis of $2,200. She has $200 in realized short-term gains from a different investment. Assume she has an income tax rate of 30% and a long term capital gains rate of 15%. What is the most tax efficient option to donate $2,000 to her favorite charity? [+] Read More

Donald Trump’s unexpected election win points to uncertainty ahead. Donald Trump’s unexpected election victory brings market and policy uncertainty in the short run. Trump’s agenda lacks detail and departs from the Republican Party tradition on trade, security and entitlements. Tapping into a backlash against the Washington status quo, he has often appeared at war with his own party and has surrounded himself with less-known advisors. We expect an initial sell-off in risk assets and flight to perceived safe havens. We see emerging markets as particularly vulnerable due to their reliance on exports and investor sentiment. We expect steeper yield curves and see health care stocks outperforming due to likely reduced regulation under Trump. Read on for an excerpt of Blackrock Investment Institute's commentary, or view the entire document here. [+] Read More

There are thousands of money managers out there. If you’re trying to figure out which one (or ones) is right for you to help you reach your investment goals, you may feel overwhelmed by all the options. Where do you begin researching and what criteria do you consider? We’d like to help. Each quarter, WrapManager’s Investment Policy Committee (IPC) compiles a list of top money manager picks in order to help investors discover and evaluate money manager strategies. These encompass a wide range of asset classes and investment disciplines. [+] Read More

In a recent post, we reminded investors of the importance of naming and reviewing beneficiaries – especially as the holidays approach. The end of the year is filled with (good) distractions, so now is a great time to double check your investment accounts. It can give you one more thing to be thankful for – that your hard earned assets will be distributed to your family, consistent with your wishes. In our previous post, we mainly focused on retirement accounts, like 401(k)s and IRAs. Retirement accounts, life insurance policies, and annuities all have beneficiary designations. You can just fill out a form to indicate how and to whom you want your assets dispersed, in a fairly straightforward and easy process. But what about taxable accounts like a brokerage account or joint tenants with rights of survivorship (JTWROS) accounts? These types of accounts are common amongst investors, yet there is no beneficiary designation attached to them. That’s where establishing a “transfer on death” (TOD) registration comes into play. [+] Read More

In a recent post on 529 plans titled, “Helping You Understand the Basics of 529 Plans,” we discussed some features of 529 plans work and whether they might make sense as part of your comprehensive financial plan. [+] Read More

Unusually consequential election challenges the post-crisis status quo. The 2016 U.S. election campaign has been unique in many ways, but the underlying dynamics are not. These are partly driven by widening income inequality across the world, in our view, a trend that has accelerated after the financial crisis and subsequent policy responses. Related is a growing perception that the benefits of trade and globalization have only accrued to a few. Whoever moves into the White House will have to address these issues, and we could see fiscal expansion directed at improving infrastructure and measures aimed at redistributing prosperity. We expect similar themes and outcomes to play out in key European elections next year. Read on for an excerpt of Blackrock Investment Institute's commentary, or view the entire document here. [+] Read More

529 plans are college savings plans sponsored by state or educational institutions. Congress created them in 1996 to provide a tax-advantaged way for people to save for college or other post-secondary education. There are numerous features of 529 plans and a wide variety of options when it comes to choosing one, so it’s prudent to consult a financial planner before making a decision. Below are some questions to help you understand the basics of 529 plans to help you get started. Who qualifies for a 529 Plan? Any U.S. citizen over the age of 18 and of any income level can open a 529 plan, and the beneficiary of the plan can be anyone with a Social Security number or tax I.D. The beneficiary can be a future college student of any age—the plan isn’t necessarily limited to people under the age of 18 who haven’t attended college yet. The owner of the 529 plan may also change the beneficiary (for example, to a different family member) if they wish. How do 529 plans work? Contributions to 529 plans are after tax, but the earnings grow tax-free on the federal level and may also qualify for state tax deductions. Once the beneficiary goes to college or a qualified post-secondary institution, distributions from the 529 plan that are used for qualified education expenses are not subject to federal tax. [+] Read More

At WrapManager, our focus is on helping you build an investment plan that can provide for you and your family—hopefully for generations to come. That means part of our work focuses on estate planning, and making sure our clients are thinking about what strategies are needed to plan for the distant future. For 2016, if your value of your estate is less than $5,545,000, then your estate tax planning process may consist of mostly fundamental estate planning—having a will, making sure your beneficiaries are in order, and maybe setting up trusts so you can control how your assets are distributed after death. WrapManager has put together this estate planning guide to help you get started.1 [+] Read More

With 2016’s all-important final quarter at the doorstep and third quarter data continuing to trickle in, hopes for a sharp second-half rebound have begun to fade.The Atlanta Fed’s closely watched GDP Now forecast for growth in the July-September quarter ended September at 2.4%, well below the 3.5% estimate at the end of August. At the same time, no one is seriously talking recession, just more of the same: muddling along while awaiting the key event of the year: the presidential and congressional elections. [+] Read More