It sounds like Kevin is masterful in structuring his personal finances. It also seems to me, though, that this is a very unusual period that threatens both our economy and a free democracy: congress has abrogated its authority to the executive branch, which disregards the Judicial branch. I am afraid we are going to end up like Disneyland's "Mr Toads Wild Ride" that had a finale of driving onto train tracks--a train crashes into you and you wind up in Hell with demons and the devil!
Economic policies are causing “the anxiety the people are experiencing”. The US is going it alone in the world on trade policy and is alienating close trading partners (bad idea); the US is shifting tariff policies every few days which is causing instability in the trading markets (bad idea); the US is kneecapping the research universities and NIH that produce valuable intellectual property (bad idea); financial reorganization is being led by billionaires in Treasury and Doge that seem to have no conception of retirement financial goals and fears. I suspect our only hope is that this is a transactional program that will realign some industries and alliances, but pulls back before sinking us into an unnecessary recession.
it may be helpful to make comparisons with the past in order to get some insight on where we are heading financially. Here is the generative AI comparison of the Smoot Hawley tariff war and similarities to our current trade war: The Smoot-Hawley Tariff Act of 1930 and the current trade war share similarities in their motivations, the reactions of other countries, and the potential for negative economic consequences. Both involve tariffs raised on foreign goods, leading to retaliatory measures from trading partners, and economists express concerns about the potential for a global trade war that could harm economies. [1, 2, 3] Here's a more detailed comparison: Smoot-Hawley Tariff Act (1930): [2, 4]
Goal: To protect American businesses and farmers by raising tariffs on imported goods. [2, 4]
Outcome: Sparked a global trade war as other countries retaliated with their own tariffs, leading to a sharp decline in international trade and exacerbating the Great Depression. [1, 3, 5]
Motivation: Both were initiated during periods of economic growth, not in response to a recession. [2]
Retaliation: Both have prompted retaliatory tariffs from foreign countries, leading to concerns about a trade war. [2, 3]
Potential Consequences: Both raise concerns about the potential for economic harm, including reduced trade, increased prices, and potential recession. [1, 3, 11]
Historical Parallels: The current trade war is often compared to the Smoot-Hawley Tariff Act, as both involve raising tariffs and potentially leading to trade wars. [1, 2, 3]
This is an extraordinary period: it is impossible to ignore the massive gyrations in markets associated with a trade war. My retirement savings dropped 10% in two weeks and then regained 4% overnight. I can’t see how a financial site can ignore this? Maybe we can just focus on how to survive the currents, eg most of us are just sitting tight with diversified investments and some stable sources of income. I don’t think it is unreasonable to discuss things like how to get ready to take advantage of a possible upcoming recession or the retirement math on putting off retirement for a year?
I don’t agree—if we go into a recession, there will be a bottom and you can do quite well. If selling volumes drop, pessimism reigns and there are huge contractions, there are opportunities. Vanguard’s large cap value fund VVIAX has dropped from 80 in the past two recessions to 20. That is an actionable bottom. If you miss and get in at 20 and 25 and 30, it is all good. Nvidia at $5/share in 2008 was a bottom. Transocean (RIG), of course went from 140 to 70 in the Great Recession and is now a stable $2 a share!
These market crashes eventually provide great investment opportunities—Warren Buffett has stored up several hundred billion that will give him tremendous leverage in upcoming bailout deals. I just hope the rest of us can recognize the market bottom and can take advantage of re-investing/rebalancing once the sellers stop selling, the blood is in the streets and those W drops seem to indicate recovery. Any help with that Jonathan? https://www.aaii.com/sentimentsurvey
I match Jeff. Both conservative monetary policy and liberal Keynesian economists oppose current tax and tariff plans. I agree with this being a non-political site, however, financial policies are being directed by the Heritage 2025 plan and includes things like Medicare cuts and should be acknowledged as a framework in consumer financial discussions: https://www.project2025.org/policy/
Rick is right that large numbers of middle and lower income households may not have investments that let them take advantage of many tax breaks used by high income individuals. Probably the most striking example of this is the low cap on taxable gains for middle income Americans. This is from the IRS: Capital gains tax ratesNet capital gains are taxed at different rates depending on overall taxable income, although some or all net capital gain may be taxed at 0%. For taxable years beginning in 2024, the tax rate on most net capital gain is no higher than 15% for most individuals.
A capital gains rate of 0% applies if your taxable income is less than or equal to:
$47,025 for single and married filing separately;
$94,050 for married filing jointly and qualifying surviving spouse; and
$63,000 for head of household.
A capital gains rate of 15% applies if your taxable income is:
more than $47,025 but less than or equal to $518,900 for single;
more than $47,025 but less than or equal to $291,850 for married filing separately;
more than $94,050 but less than or equal to $583,750 for married filing jointly and qualifying surviving spouse; and
more than $63,000 but less than or equal to $551,350 for head of household.
However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate.
There are a few other exceptions where capital gains may be taxed at rates greater than 20%:
The taxable part of a gain from selling section 1202 qualified small business stock is taxed at a maximum 28% rate.
Net capital gains from selling collectibles (such as coins or art) are taxed at a maximum 28% rate.
The portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum 25% rate
https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2024.pdf Good points—what was eye opening to me is the graph of cumulative returns:showing <10% of active funds beat index benchmarks over long time periods in any of the many investing categories, eg large cap/small cap, growth/value, etc.
A more conservative, simple approach is to just multiply your current income by 25 as your retirement savings goals and then try to stay near or below the 4% per year spending. Your choice if you want to drop that to 20x and live more modestly and donate or leave less to heirs. IRA RMD withdrawals ramp up from 2,2% over the retirement years and along with SS payments should keep you in a safe income range regardless of the actuarial estimates you are guessing at.
Comments
It sounds like Kevin is masterful in structuring his personal finances. It also seems to me, though, that this is a very unusual period that threatens both our economy and a free democracy: congress has abrogated its authority to the executive branch, which disregards the Judicial branch. I am afraid we are going to end up like Disneyland's "Mr Toads Wild Ride" that had a finale of driving onto train tracks--a train crashes into you and you wind up in Hell with demons and the devil!
Post: No financial wisdom here other than ….
Link to comment from April 15, 2025
Economic policies are causing “the anxiety the people are experiencing”. The US is going it alone in the world on trade policy and is alienating close trading partners (bad idea); the US is shifting tariff policies every few days which is causing instability in the trading markets (bad idea); the US is kneecapping the research universities and NIH that produce valuable intellectual property (bad idea); financial reorganization is being led by billionaires in Treasury and Doge that seem to have no conception of retirement financial goals and fears. I suspect our only hope is that this is a transactional program that will realign some industries and alliances, but pulls back before sinking us into an unnecessary recession.
Post: No financial wisdom here other than ….
Link to comment from April 13, 2025
it may be helpful to make comparisons with the past in order to get some insight on where we are heading financially. Here is the generative AI comparison of the Smoot Hawley tariff war and similarities to our current trade war: The Smoot-Hawley Tariff Act of 1930 and the current trade war share similarities in their motivations, the reactions of other countries, and the potential for negative economic consequences. Both involve tariffs raised on foreign goods, leading to retaliatory measures from trading partners, and economists express concerns about the potential for a global trade war that could harm economies. [1, 2, 3] Here's a more detailed comparison: Smoot-Hawley Tariff Act (1930): [2, 4]
- Goal: To protect American businesses and farmers by raising tariffs on imported goods. [2, 4]
- Outcome: Sparked a global trade war as other countries retaliated with their own tariffs, leading to a sharp decline in international trade and exacerbating the Great Depression. [1, 3, 5]
- Key Characteristics: [2, 4]
- Increased tariffs on a wide range of imported goods. [2, 4]
- Led to retaliation from foreign countries, who imposed tariffs on U.S. goods. [2, 5]
- Significantly reduced international trade and U.S. exports. [5, 6]
- Contributed to the Great Depression. [1, 5]
Current Trade War: [3, 3, 7, 7]- Goal: To address trade imbalances, protect American industries, and counter perceived unfair trading practices. [3, 3, 7, 7, 8, 9, 10]
- Outcome: Involves tariffs on goods from countries like China, Canada, and Mexico, prompting retaliatory measures from those countries. [3, 3, 7, 7]
- Key Characteristics: [3, 3, 7, 7]
- Involves tariffs on a variety of goods. [3, 3, 7, 7]
- Has triggered retaliatory tariffs from other countries, potentially leading to a trade war. [3, 3, 7, 7]
- May negatively impact international trade and the U.S. economy. [3, 3, 7, 7]
- Raises concerns about potential economic downturns and increased inflation. [7, 7, 11, 11]
Similarities: [2]- Motivation: Both were initiated during periods of economic growth, not in response to a recession. [2]
- Retaliation: Both have prompted retaliatory tariffs from foreign countries, leading to concerns about a trade war. [2, 3]
- Potential Consequences: Both raise concerns about the potential for economic harm, including reduced trade, increased prices, and potential recession. [1, 3, 11]
- Historical Parallels: The current trade war is often compared to the Smoot-Hawley Tariff Act, as both involve raising tariffs and potentially leading to trade wars. [1, 2, 3]
Generative AI is experimental. [1] https://san.com/cc/what-is-the-smoot-hawley-tariff-act-the-1930-tariffs-didnt-age-well/ [2] https://www.rabobank.com/knowledge/d011321764-trade-wars-then-and-now-smoot-hawley-all-over-again [3] https://www.cnbc.com/2025/02/05/how-smoot-hawley-tariff-sparked-the-mother-of-all-trade-wars.html [4] https://www.britannica.com/topic/Smoot-Hawley-Tariff-Act [5] https://www.goodmorningamerica.com/news/story/smoot-hawley-tariffs-trump-116381286 [6] https://www.investopedia.com/terms/s/smoot-hawley-tariff-act.asp [7] https://www.gmfus.org/news/trump-tariffs-their-impact-and-us-public-opinion [8] https://brainly.com/question/56844471?source=new+history+questions [9] https://www.trtworld.com/opinion/advantage-china-why-trumps-tariff-gamble-could-backfire-on-the-us-18261628 [10] https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act [11] https://www.usatoday.com/story/money/2025/04/07/smoot-hawley-trump-tariffs/82977177007/Post: No financial wisdom here other than ….
Link to comment from April 12, 2025
This is an extraordinary period: it is impossible to ignore the massive gyrations in markets associated with a trade war. My retirement savings dropped 10% in two weeks and then regained 4% overnight. I can’t see how a financial site can ignore this? Maybe we can just focus on how to survive the currents, eg most of us are just sitting tight with diversified investments and some stable sources of income. I don’t think it is unreasonable to discuss things like how to get ready to take advantage of a possible upcoming recession or the retirement math on putting off retirement for a year?
Post: No financial wisdom here other than ….
Link to comment from April 12, 2025
I don’t agree—if we go into a recession, there will be a bottom and you can do quite well. If selling volumes drop, pessimism reigns and there are huge contractions, there are opportunities. Vanguard’s large cap value fund VVIAX has dropped from 80 in the past two recessions to 20. That is an actionable bottom. If you miss and get in at 20 and 25 and 30, it is all good. Nvidia at $5/share in 2008 was a bottom. Transocean (RIG), of course went from 140 to 70 in the Great Recession and is now a stable $2 a share!
Post: Risky Business – Challenging Times
Link to comment from April 7, 2025
These market crashes eventually provide great investment opportunities—Warren Buffett has stored up several hundred billion that will give him tremendous leverage in upcoming bailout deals. I just hope the rest of us can recognize the market bottom and can take advantage of re-investing/rebalancing once the sellers stop selling, the blood is in the streets and those W drops seem to indicate recovery. Any help with that Jonathan? https://www.aaii.com/sentimentsurvey
Post: Risky Business – Challenging Times
Link to comment from April 7, 2025
I match Jeff. Both conservative monetary policy and liberal Keynesian economists oppose current tax and tariff plans. I agree with this being a non-political site, however, financial policies are being directed by the Heritage 2025 plan and includes things like Medicare cuts and should be acknowledged as a framework in consumer financial discussions: https://www.project2025.org/policy/
Post: How’s Your Crystal Ball? By Jonathan Clements
Link to comment from March 31, 2025
Rick is right that large numbers of middle and lower income households may not have investments that let them take advantage of many tax breaks used by high income individuals. Probably the most striking example of this is the low cap on taxable gains for middle income Americans. This is from the IRS: Capital gains tax ratesNet capital gains are taxed at different rates depending on overall taxable income, although some or all net capital gain may be taxed at 0%. For taxable years beginning in 2024, the tax rate on most net capital gain is no higher than 15% for most individuals. A capital gains rate of 0% applies if your taxable income is less than or equal to:
- $47,025 for single and married filing separately;
- $94,050 for married filing jointly and qualifying surviving spouse; and
- $63,000 for head of household.
A capital gains rate of 15% applies if your taxable income is:- more than $47,025 but less than or equal to $518,900 for single;
- more than $47,025 but less than or equal to $291,850 for married filing separately;
- more than $94,050 but less than or equal to $583,750 for married filing jointly and qualifying surviving spouse; and
- more than $63,000 but less than or equal to $551,350 for head of household.
However, a capital gains rate of 20% applies to the extent that your taxable income exceeds the thresholds set for the 15% capital gain rate. There are a few other exceptions where capital gains may be taxed at rates greater than 20%:Post: Yup, most usable, needed tax breaks go to average/middle class Americans.
Link to comment from March 19, 2025
https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2024.pdf Good points—what was eye opening to me is the graph of cumulative returns:showing <10% of active funds beat index benchmarks over long time periods in any of the many investing categories, eg large cap/small cap, growth/value, etc.
Post: Active vs. Passive Funds in 2024: It’s Deja Vu (All Over Again) by Steve Abramowitz
Link to comment from March 9, 2025
A more conservative, simple approach is to just multiply your current income by 25 as your retirement savings goals and then try to stay near or below the 4% per year spending. Your choice if you want to drop that to 20x and live more modestly and donate or leave less to heirs. IRA RMD withdrawals ramp up from 2,2% over the retirement years and along with SS payments should keep you in a safe income range regardless of the actuarial estimates you are guessing at.
Post: How does the 4% Rule Change Assuming A Couple in Retirement?
Link to comment from February 27, 2025