Smarter Bear Newsletter July 2024

For clients and friends of Smarter Bear

Annuities are very popular.

$385 Billion were sold in 2023. The concept is simple: you give the insurance company some money, and they guarantee you a return that might include a lifetime stream of payments. But there are many types of annuities - fixed, variable, index, immediate, deferred, single/joint life, with various terms, guarantees/riders/floors/caps, and fees. And risks, particularly with low-rated companies and those owned by private equity investors. Smarter Bear does not sell annuities as we are a fee-only fiduciary. We do analyze existing annuities and recommend no-commission, low-cost fixed annuities from highly rated insurance companies for certain client circumstances. Get some advice from someone not making money from the sale before buying a new annuity or deciding about an existing one.

Health Savings Accounts (HSA) are not all or nothing.

If there are two working spouses, one can have a regular health insurance plan, and the other can have a high-deductible Health Plan (HDHP). The spouse on the HDHP can contribute to the HSA up to the single-person limit ($4150 in 2024).

Collectibles and taxes

Collectibles, including stamps, coins, metals (like gold and silver), antiques, rugs, and alcohol, are taxed at a higher capital gains rate than other assets. The higher tax rate is worth considering when buying gold or silver coins, bars, or ETFs directly holding gold or silver. IRAs cannot hold collectibles except physical gold, silver, palladium, and platinum bars or coins.

Tax-smart moves to consider:

• Contributing to IRA/401k

• Roth conversions

• Balancing capital gains and losses

• Tax loss harvesting for equities and fixed income, too

• Bunching charitable deductions to enable the use of itemized deductions in a tax year.

Keep an eye on the upcoming tax changes scheduled for 2026 and other potential changes to tax laws. Smarter Bear summarized the significant tax changes scheduled to occur as part of the TCJA sunset and potential actions.

Smarter Bear is always available for a free consultation to answer questions and discuss whether our services can help address your needs. You can reach us at smarterbear.net. We also offer no-cost second opinions for DIYers or people working with another investment or financial advisor. 

We write our own newsletter, so we know these topics well.  Many advisors and firms employ marketing departments, generative AI, or third-party content services to produce their newsletters.

If you know others who would like to be added to our list, feel free to add them at https://smarterbear.substack.com. We aim to write short, helpful, and easy-to-read items on financial topics of interest. We welcome any suggestions for topics to cover in future newsletters.

None of the above is intended as a substitute for tax or legal advice.  Your personal situation will determine what's best for you, and we recommend you consult an appropriate professional advisor.