Investment Newsletter for the end of March, 2019

A lot of volatility in the stock market this month, but in the end it didn’t go anywhere. The Dow ended the month a few points up compared to the beginning of the month. The quarter, however, was fantastic. The biggest lesson to take from this is try to freak out about daily fluctuations and swings. What happens day to day has no significance at all when it comes to long term movements.

The first main thing discussed in this newsletter will be a reminder to file your tax return. The reason is that being forced to pay a bunch of penalties and interest for being late will hurt your financial health and wellbeing. The deadline is April 15, or you can file for an extension. Either file your tax return or file for an extension as soon as you can.

The second main thing discussed will be how to calculate income taxes owed. Income taxes means that you pay a percentage of how much you’ve earned during the year to the government. However, the level of income used for the calculation will be smaller than the amount of income you actually earned because of something called a deduction. Deductions are subtracted from your reported income. For example: Let’s say you earned $50,000 during the year. If you have $13,000 worth of deductions, the amount of your income that is subject to tax is $37,000.

There are 2 broad categories of deductions. You get to use the larger of the two. They are itemized deductions and a standard deduction. The standard deduction varies based on marital status and age. You cannot use both on a tax return but you are allowed to use one method on the federal and a different method on the state. Itemized deductions are in response to behavior that you do such as giving to charity, paying mortgage interest, property tax, paying medical bills, etc. You and/or your accountant can figure out the category that reduces your tax bill the most. There is also something called credits that directly reduce your tax bill. These are also in response to behavior. For example: if you originally owed $5000 in tax and you use a $1000 credit, you now owe only $4000 in tax. You can get a complete list of deductions and credits that are available from the internet. You can also call Dan and ask. He does most of your tax returns.

The United States has a progressive tax structure. That means the more you earn, the higher percentage you pay. The higher percentage is only applied to the little piece of income earned above a cutoff number. The lower percentages are used for the portion of the income below the cutoff. Let’s now put everything learned in the newsletter together in a final example. Let’s say you earned $52,000 during the year. You decide to use the $12,000 standard deduction (the standard deduction available to most single people). Your taxable income is now $40,000. Because of the progressive structure, you pay 10% on the first $9700, 12% on the next $29,775, and 22% on the final $525. You owe $4658.50. You apply a $1000 credit and your final tax bill is $3658.50.

Dan and Eli

Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. I will waive personal tax return fees for accounts over $1 million. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

Learn About My Business


Leave a Reply

Your email address will not be published. Required fields are marked *