October 4th, 2025 - Tax Planning is Fun Again!

Hosts Steve Van Wie and Adam Van Wie discussed current market conditions, including the impact of a government shutdown, and analyzed market trends, with an optimistic view of growth opportunities. Additionally, the team provided detailed tax planning strategies, emphasizing the benefits of updated tax laws and available tax credits for clients.

Transcript

STEVEN H VAN WIE 0:01

It's Saturday morning, it's 10 o'. Clock. This is the Ban we Financial Hour. I'm Steve Ban We. And Joey is on hiatus an extra week more than he thought because he got a little misinformation about family being in town. So you'll, you'll hear him again next week and we can find out how it's going with the new baby. For today, Adam and I will just, just keep it going. I don't know what in the world we could possibly find to talk about.

Adam Van Wie 0:07

And I'm Adam Van We.

Adam Van Wie 0:30

I had just a lack of subjects this week.

STEVEN H VAN WIE 0:33

It's just incredible, isn't it? Anyway, welcome back to all the regulars. We've been doing this a long time, you've been doing it for a long time and let's keep that relationship going. If you're new to the show, whether you heard about it from someone or just accidentally stumbled on it, then welcome and try to stay the whole time. You know, there's a reason I opened the show the same as I did on day one. It's Saturday morning, it's 10 o', clock, and this is the Ban we Financial Hour. I want those words to trigger a thought and everybody who's ever heard the show. So if you're cruising along and not really paying much attention on a Saturday morning to what time it is and you happen to check your watch and says 10 o', clock, first thing you should think about is getting the radio onto our program. There's a method of my madness here and there. There's probably a lot of my madness that has no method, but on that one it's well thought out. Yes, I bet you could. Well, as I said, we have an interesting array of things to talk about. There is so much going on and so much of it is so stupid and yet other parts of it are so important. So what's been happening has been interpreted as pretty good news lately. You seem to be listening to us week after week say it was a good week in the market and I'm not going to break that cycle, are you? Good. Keep it going.

Adam Van Wie 1:26

I can attest to that.

Adam Van Wie 1:59

Nope. Yeah. It was certainly an eventful week. There was no shortage of things to talk about. My prediction of a government shutdown actually came true. And a few weeks ago when I was on, I missed. Last week I was out of town. But the week before, I believe I said, don't worry about the market and the news is going to try and make it like this is the end of the world and we're all going to die and whatever else they want to say. But the government shut down this week. And I honestly couldn't. If, unless the news hadn't told me, I, I, there's no way I would have known. How would you know?

STEVEN H VAN WIE 2:36

I mean, well, there are people who will be affected. Most of them temporarily.

Adam Van Wie 2:39

Absolutely.

Adam Van Wie 2:41

Yes. If you're a government worker, especially in the greater D.C. metro area, you, you may be furloughed. And so yes, there are people that are affected. And I, I know that makes life hard temporarily, but the thing is when, when the government reopens, they get all the back pay. So it's not, I mean, yes, it's a temporary hardship, but that's, if that's the worst thing that comes out of this, who cares?

STEVEN H VAN WIE 3:06

Exactly. And there's not going to be any mass layoffs and mass firings if they just get their act together and reopen the government. Adam and I were talking just for a minute right before the show, but how this whole thing is just so stupid. There aren't issues out there worth doing anything about.

Adam Van Wie 3:25

Yeah, I'm, I'm not going to go into an in depth analysis of, of this because you can get that on every other news station.

STEVEN H VAN WIE 3:32

147365 but it is real.

Adam Van Wie 3:35

This is really dumb. There's just no reason for us to be going through this right now. Not that we're going through anything because the market was great. I didn't notice that the government shut down and so on and so on, but it's just, it's, it's a ridiculous situation. It is not going to affect the market. Really. It is not. And in fact, historically the market has rallied during government shutdowns. And in fact, the market actually shows really strong gains a year out from most shutdowns. So I don't know that those two things are related, but it is the, historically that has been the case. The third quarter is now in the books as well. So that was another big event this week. The worst quarter, the worst quarter of the year. And that was not the case this year.

STEVEN H VAN WIE 4:15

Yep.

STEVEN H VAN WIE 4:18

We got it. We, we took that and got it out of the way in the first quarter. So now we didn't have to do it.

Adam Van Wie 4:23

That's.

Adam Van Wie 4:25

Maybe that's what happened. But this third quarter included an S P gain of 8.1%, a Dow gain of 5.6%, and the Nasdaq was up almost 9% year to date. S P is now up 14.2, the Dow up 9.3 and the Nasdaq up.

STEVEN H VAN WIE 4:43

18.3 and the small caps closed at a record yesterday.

Adam Van Wie 4:48

Yeah, it's again. Yeah, it's really been insane. I guarantee you that these numbers are better than almost anyone thought possible this year. I'd love to go back and pull some receipts. I remember Goldman Sachs saying we were in. I think it was Goldman. Maybe it was someone else. Don't attribute that to them. But one of the big banks came out and said we're in, we're in for a 10 year slow growth period of like 4% or something.

STEVEN H VAN WIE 5:12

If you googled those words and put any year you want to on there most years you would get a hit for the same stupid predictions. And then if you look what happened over the next 10 years, it's. They hang in on average right about at the long term, 10.9%.

Adam Van Wie 5:21

Yeah.

Adam Van Wie 5:29

It wasn't long ago they were saying the 6040 is dead. Well, this has been one of the best years for the 6040 on record. So go figure.

STEVEN H VAN WIE 5:37

It makes our jobs more fun, doesn't it?

Adam Van Wie 5:39

It does just when you. But it's, it also makes it more difficult because you really have to focus on tuning out the noise and go with what you know to be true historically and what will probably be true this time. It's not different, it's the same. Yes, there are certain different things that happen on a day to day basis but the long term trend has never really changed. It's always been the same. So, so tuning out the noise, I think in this environment today with all the different sources, the. That's what makes it harder today than it has been historically. Historically you might, you might get a snippet on the news at night, you might get something on the radio in the morning, but now it's just 24, seven beating the drum. So I think that's the harder part. Some notable movements in the third quarter included a small cap value which gained 11.7%. It's been a long time since I said that. And the S and P growth gained almost 10% while value gained just over 6%. The weakest area of the S P was consumer staples which actually traded down 2 1/2 percent. Every other sector was positive by the way. So that was a little, little bit of a divergence from the norm. The top performing area was semiconductors which gained over 17%. Now semiconductors are not an official segment of the S and P, although I firmly believe they should be broken out and they should be a separate sector at this point. It's actually part of the Technology sector, which was up a 11.5%. So technology did great, but a lot of that was attributable to the semiconductor.

STEVEN H VAN WIE 6:31

Yes it has.

STEVEN H VAN WIE 7:12

I think technology got up to a 35.

Adam Van Wie 7:16

35. Yeah.

STEVEN H VAN WIE 7:17

When you get that big and what do they count? 12 or 17.

Adam Van Wie 7:21

Well, and that is, that comes with an asterisk too, because they broke out a bunch of companies into communication services a while back, otherwise it would be, I don't know, over 40%.

STEVEN H VAN WIE 7:31

Yeah, this needs to be done again. And, and I predict that it will be done.

Adam Van Wie 7:34

I think so too. I think semiconductors will be an official sector.

STEVEN H VAN WIE 7:37

Too much influence on the index itself and it doesn't reflect the market well. And the purpose of the S and P is to tell people that there's a better way to measure the market than just looking at the Dow.

Adam Van Wie 7:49

Yeah, exactly. But this is long overdue. Technology has just grown so much and I think you have to start breaking it up into smaller portions. So I've got a bunch more, but we're, we've got about 30 seconds to the break, so I will pick it up on the other side.

STEVEN H VAN WIE 7:58

Yep.

STEVEN H VAN WIE 8:05

Well, I'll give you the one casualty before the break of the government shutdown. I only have one jobs number to lie to you about today. And by lie to you, I mean repeat what they said about it. Which is the same thing. So we'll, we'll discuss the implications of that as soon as we get back. Don't go anywhere. We'll pay a few bills. Be right back. This is the Van We Financial Hour. Welcome back to the Van We Financial Hour. I'm Steve Van We. And we do have a trivia question as usual, brought to you by Paul Lloyd, First Coast Alarm. You can call Paul at 904-636-7888.

Adam Van Wie 8:13

That's true.

Adam Van Wie 8:17

Yeah.

Adam Van Wie 8:31

And I'm Adam Van We.

STEVEN H VAN WIE 8:44

Talking about the bull market and so on. And last week I was talking with Angela about how housing prices and such and wealth and all kinds of those things. So I've talked ad nauseam about the difference between the average and the mean and how numbers are very, very difficult to interpret sometimes. And I saw a classic example of that and a couple of classic examples, the median and average on wealth in America. The median wealth, meaning there's as many people who are wealthier as there are people who are less wealthy. It's $124,000.

STEVEN H VAN WIE 9:27

That is not a very large number. No, the average wealth is $621,000.

Adam Van Wie 9:36

Interesting.

STEVEN H VAN WIE 9:36

That's a pretty big number.

Adam Van Wie 9:38

That's because it's skewed upward by the uber rich.

STEVEN H VAN WIE 9:41

That's right. So the, when you go under 124,000,

STEVEN H VAN WIE 9:47

you can't go very far under. But when you go over it, you can go a long way. Well, the same is true on the bull market. This bull market started in October of 22 and it's up 88%. Not bad, huh? The average bull gains 114%.

Adam Van Wie 9:48

That's right.

STEVEN H VAN WIE 10:09

What does the median bull market gain?

STEVEN H VAN WIE 10:13

It's just a, it's a percentage number and I'm not going to give you anything more than that. I will do this, though. It is also less than the average. So I did capital between 0 and.

Adam Van Wie 10:26

114, which makes sense.

STEVEN H VAN WIE 10:28

Yeah. And you said, I'm just in such a good mood today, I'm practically giving answers away. Right? Practically. Except for the part about you got. A call, so there's that too. 904-222-8255

Adam Van Wie 10:33

Practically.

Adam Van Wie 10:36

To get it right and you got. Yeah.

STEVEN H VAN WIE 10:43

and the lines are open. All right. More things about the market this week. Very interesting things yet to come. And then we'll talk jobs. Sure.

Adam Van Wie 10:52

International stocks. I wanted to talk a little bit about the third quarter was a bit more of a mixed bag. Argentina dropped more than 17%.

Adam Van Wie 11:01

Well, India was down six and a half and Germany was down 1.7. But on the other side, China gained a pretty astonishing 19 and a half percent, although they had been really beaten down. So.

STEVEN H VAN WIE 11:11

Yeah. Conversely, do you think that was because Argentina's practically exploded under melee.

Adam Van Wie 11:17

I think that Argentina.

Adam Van Wie 11:21

Well, I think there's a number of things going on there. They really gotten their inflation quote unquote under control relative to where it was. I, I, I don't know what, what the, this particular drop was, but I did see something where one of someone who is anti him got elected and maybe they think that he won't be in power that long and after all the great things he's done for the country. I, I don't know.

STEVEN H VAN WIE 11:47

Yeah, well, we'll, we'll fix his wagon, right? We'll just get rid of him.

Adam Van Wie 11:52

Yeah, exactly.

STEVEN H VAN WIE 11:54

Good morning, Bob.

Speaker 3 11:55

Good morning. Calling from a secret location.

STEVEN H VAN WIE 12:00

Keep it secret,

STEVEN H VAN WIE 12:03

otherwise they'll come and get you. You know that.

Speaker 3 12:05

Hey, I think, you know, the market is also reflecting the overall attitude of the country right now, including the tenacity of the party in power to hold the line on some of the changes that affect the numbers even more moving forward.

STEVEN H VAN WIE 12:24

So they are showing some backbone here and there. That's a good thing.

Speaker 3 12:29

Yep. So, yes, that's, that's true. But I, I was just tuning in when you were talking about the mean and the average. What was the mean and the average again?

STEVEN H VAN WIE 12:33

Yeah.

STEVEN H VAN WIE 12:43

All right, for, for wealth. I'm just giving you an example based on wealth. The, the median US wealth is 124,000, but the average wealth is 621,000.

STEVEN H VAN WIE 12:57

So the current bull market is up 88% and the average overall bull market goes up 114. So we would have some room to run there, obviously. But what is the median bull market? That it's between 0 and 114 62.

STEVEN H VAN WIE 13:17

A little bit low, but you have really narrowed the gap now. So everybody who wants to call, thank Bob on the way in. That's the way. All right. Yeah, we'll enjoy the, we'll talk about all those things today because there's just so much going on. It's. Thank you. Always good to hear from you.

Speaker 3 13:25

There you go.

Speaker 3 13:31

Okay. Very good.

Adam Van Wie 13:36

I think, I think his point about the mood of the country being reflected, that's part partially what it's reflecting. I also think that this new tax law is doing more positive than it's being given credit.

STEVEN H VAN WIE 13:50

That's one of my topics for the second half of the show today. It is such a pleasure to be doing tax planning in October instead of waiting for the idiots in Congress to give us the numbers on the 21st of December when everybody's headed out, if. Yeah, exactly. Sometimes it even goes into January. Sometimes it's a little hard to do financial planning when you're on a cash basis and you don't have the number on December 31st. But anyway, this year, it's a lot more fun this year. And we got some suggestions. Stay tuned to the end of the show because it'll take a while to get there.

Adam Van Wie 14:04

We'Re lucky enough to get them by then.

Adam Van Wie 14:25

Definitely. Well, let's, let's go back to the international side. I mentioned that China gained 19.5%. They had been really, really beat up. Just absolutely decimated. Property market is, is an absolute mess right now. I don't think that's improved at all. The government was doing lots of fiscal stimulus and maybe that's a reflection of, of that as well. Mexico and Spain had a good quarter. They were both up over 12%. And the all world index was up 6.9%.

Adam Van Wie 14:57

That's except the U.S. and then the emerging markets were up 10.7. A lot of that coming from China. So just a great quarter all around on the equity side. On the commodity side, it was a mixed bag. Natural gas did what it always seems to do, lost another 14 and a half percent.

STEVEN H VAN WIE 15:13

And then it turned back up at the end of the. And when October came in, it turned right back up. I missed my stop.

Adam Van Wie 15:18

It's still down.

Adam Van Wie 15:21

Gold had a really solid quarter. Excuse me. Building on its solid year and gaining 16.6%. That was in the quarter. It's now up 46.8% this year.

STEVEN H VAN WIE 15:32

Yeah, that discussion's been going around too, in the office and otherwise. And feel free to talk about that one.

Adam Van Wie 15:35

Oh, yeah.

Adam Van Wie 15:39

I mean, that seems like a big quarter. But then you look at Silver. It was up over 19 in the quarter and it's now up 61% this year. Crazy. And we do have another caller.

STEVEN H VAN WIE 15:47

Yeah. It really is.

STEVEN H VAN WIE 15:51

Oh, good.

STEVEN H VAN WIE 15:54

Good morning, Leroy. I would imagine there's a misspelling, but that's got to be you out there.

Speaker 3 16:01

That's got to be the April one of us in Middlebrook.

STEVEN H VAN WIE 16:04

There you go.

STEVEN H VAN WIE 16:06

What's up?

Speaker 3 16:07

I'm just trying to. I just want to narrow your bracket some more. Okay. I'm about 74.

STEVEN H VAN WIE 16:10

Oh, good.

STEVEN H VAN WIE 16:16

You've been looking around or not. You're still too low? Okay, good. Yeah. We had, remember a couple weeks ago, I think it was Bob, that just took a scientific guess, as it turned out and nailed it. This one. I'm going to tell everybody you're pretty close, but no cigar.

Speaker 3 16:19

No. Still too low.

Speaker 3 16:36

No cigar. Okay. Okay.

Adam Van Wie 16:37

All right.

STEVEN H VAN WIE 16:38

We appreciate the call.

Speaker 3 16:40

All right. Thank you much.

STEVEN H VAN WIE 16:41

Thanks. Stay dry.

STEVEN H VAN WIE 16:44

It's looking like it's going to be a little wet out there. That was pretty good, though.

Adam Van Wie 16:49

Outside of equities and commodities, bonds had a really good week. They gained about 2% overall. Rates fell a little, but not really enough to drive bonds up 2%. It was a. It was kind of an outsized move. But if you hold bond funds right now, you're probably having a pretty good year. And I mentioned earlier how well the 6040 portfolio is doing. That has a lot to do with that. And that has not been the case over the last few years. Both the ISM numbers were released this week and they weren't great. The manufacturing number was actually up over last month and very close to Showing growth at 49.150 shows growth. The services number came in right on that 50 number, which means it was neutral. The expectation was for a 51.7, though, which would have been solidly in the expansion territory. So despite that kind of not great number on the services side, the services number has shown expansion 10 out of the last 12 months. So it's been a pretty strong one year return on that.

STEVEN H VAN WIE 17:09

Yes, it does.

STEVEN H VAN WIE 17:49

But yeah, and that's been the inflationary segment of the society lately too. Softening is okay by me.

Adam Van Wie 17:54

That is true that that is something that most people wouldn't consider when you at a number like that. But there has been a lot of inflation in the services sector. But overall two numbers with 50 or below not ideal on those reports.

STEVEN H VAN WIE 18:09

Yeah.

Adam Van Wie 18:09

And that was, that was everything I had. I know you wanted to talk jobs a bit.

STEVEN H VAN WIE 18:12

Yeah. But I did want to throw in one little thing before I do that. Over 500,000Americans

STEVEN H VAN WIE 18:20

became millionaires last year in their 401ks and so on. Yeah. This was especially big in this quarter. They dropped 5% in the first quarter this year and now we're up again at an all time high and they're doing it the old fashioned way. In American equities, largely. Some are in cryptos and some are in, in precious metals and so on, but only a percentage. But overall, if you've got a, a decently balanced portfolio and have been in the market for quite a while and have contributed a lot, looking at that million mark has become an easier and easier.

Adam Van Wie 19:03

The best thing about this year too is it doesn't matter where you put your money, everything's doing well. I mean if you're in bonds, you're up 7%. If you're in stocks you're up 10%. If you're in international equities, you're up over 10%. It's just been such a good year. If you're in gold and silver, you're up 40%. So it's just been an amazing year to be an investor.

STEVEN H VAN WIE 19:22

Yeah. You don't want to be chasing things so much as just keeping on, keeping on. In other words, what you're doing, if you're finding yourself successful, just keep doing it. Yeah.

Adam Van Wie 19:34

Look at rebalancing, chase things. Look at rebalancing actually selling off your winners and buying the things that are up less. I mean that's, that's really what you should be thinking about as we move towards the end of the year because. Yeah.

STEVEN H VAN WIE 19:45

You know what's going to happen. Everything reverts back to the mean given a chance. So we, we will go into that a little deeper on the other side. I'll cover jobs first and then some of that. And it's, you know, it's all political junk too that you can't help it. So I'll. I'll tell you what happened and you can, you can make your own notes as to why. So anyway, we'll pay a few bills and be right back. Don't go anywhere. This is the Van WE Financial Hour. Welcome back to the Van we Financial Hour. I'm Steve Van We.

Adam Van Wie 20:20

And I'm Adam Van we have been.

STEVEN H VAN WIE 20:23

Talking about a lot of things and one of them I mentioned was jobs. So with the government shutdown, the Bureau of Labor Statistics, the people charged with calculating the two surveys for the. For the government, they did not produce any numbers. What did produce numbers was the one that comes out the first Wednesday of the month. It's the adp, the private payrolls number. And they're usually pretty accurate because what they do is they prepare payrolls. So take a sampling, look at their own data. Yeah, it's kind of captive. So that headline came out on Wednesday morning and there was panic in the streets, minus 32,000 jobs. So of course the left and the media, I'm sorry for the redundancy, they jumped on it. Oh, the Trump economy is losing jobs. This is awful. Well, I'm going to read you the first paragraph of the ADP report and then I'm going to drop the subject. ADP conducted its annual preliminary re benchmarking of the national Employment Report in September based on the full year 2024 results of the Quarterly Census of Employment and Wages. That's a long sentence. This recalibration resulted in a reduction of 43,000 jobs in September. Compared to pre benchmark data, the trend was unchanged. Job creation continues to lose momentum across most sectors. So we were up 11, we were not down 32. That was a numerical adjustment that did not affect anyone. Enough said. Okay, moving right along, let's see. Do we want to do anything else here? Oh yes. I wanted to mention one if, if all you're looking for a hot stock here, I. I'm so good at hot stocks. Right. Ever heard of a company called Rigetti?

Adam Van Wie 22:24

I have read about it, but I don't know much about it.

STEVEN H VAN WIE 22:27

Symbols RGTI. In the past year it's up 4760%.

Adam Van Wie 22:34

It's a pretty good return.

STEVEN H VAN WIE 22:35

Not bad. It has a market cap first, let's talk about sales first. The.

STEVEN H VAN WIE 22:44

The sales this past year were 8.2 million with an M. $8.2 million.

Adam Van Wie 22:51

Why is this a publicly traded company? It doesn't make any sense.

STEVEN H VAN WIE 22:54

They're betting on growth, I guess. The market cap today is $14 billion.

Adam Van Wie 23:02

That's insane. With a B, that's insane.

STEVEN H VAN WIE 23:05

That's 1700 times what it's actually worth in my book. So if you're looking for a flyer, don't look there. That would be a mistake. Yeah, but

Adam Van Wie 23:09

Wow.

Adam Van Wie 23:15

That's crazy.

STEVEN H VAN WIE 23:19

that's the problem with this momentum type investing with the hot stocks. Just don't do it. Duff said. All right, who knew Social Security would end paper checks? I wanted to get that one off the top of the list also.

STEVEN H VAN WIE 23:35

Let's see, where do we go now? Want to talk about tax planning first or should we put that down the road?

Adam Van Wie 23:42

Whatever. Whatever you want to do.

STEVEN H VAN WIE 23:44

All right. This whole tax planning season is unlike anything that I have seen in the 2023, four years I've been doing this. It is so nice to know the rules all of a sudden prior to what needs to be done. And we're back to. You don't have to automatically assume everybody is going to take the standard deduction this year because there were some changes made that could change things a lot. One of them is the increase in the SALT limits. The state and local taxes that jumped from 10 million or 10,000, I mean, to 40,000, which, if you're in a high tax state and make good money, might affect you.

Adam Van Wie 24:32

Unless you make too much money.

STEVEN H VAN WIE 24:33

Right. In which case the problem with that is it's income limited, again, restricted. So if you make too much, it starts coming back down. And if you go over the certain level, you're back to 10. But everybody gets a 10. Well, what if you're not above the 10 in state and local taxes? What can you do about it? Well, here's one. Most everybody I know has the option of paying their property taxes in one of two different years or splitting them. So let's say that you could exceed your 10,000 next year if only you could pay this year's taxes and next year's taxes, property taxes next year. Well, then maybe you should think about doing that. It does have a little cost to it, to defer it. I talked St. John's county because of the ones I know, because I live there. But you can, you can do that. You can also look at your medical expenses. Medical expenses are deductible above 77.5% of your adjusted gross income. That means if you have big medical expenses coming up, you might want to think about deferring them to next year because that might put you over that limit also. But like everything the government does, there are so many springs attached to these things. Like, we know that all of us who are 65 and over were gifted another $6,000 deduction. Standard deduction. That's independent of everything else you get it. Except that one thing it is dependent on is it also phases out with your income. So when you start your spreadsheet or your analysis, you have to look at that as well because sometimes you might want to not take in that income or cut your expenses down somehow. One of the ways to do it, a lot of people know what the qualified charitable a contribution is. Qcd, as they're called in the business.

Adam Van Wie 26:33

Deduction. Yeah, it you or donation.

STEVEN H VAN WIE 26:37

Yeah. If you're 70 and a half, you can make a direct charitable donation from your ira. And you get that. You, you get the what the benefit, I guess the charitable aspect of it. But it does not hit your income statement. It doesn't go up. And then you have to deduct it. It just. It's like it never happened. Except it can count toward your required minimum if you're needing to take one. And one way or the other, you get your donation done and it does not cost you anything in income. You can. Now that's limited to something like $125,000

STEVEN H VAN WIE 27:16

a year. You don't even have to worry about that most people. But there is now an Everyman's QCD and it goes up to 2000 for a couple thousand individual. That can be done out of your cash account. But the rules are the same. You have to send the check directly. That your account sends the check directly to the charity has to be a qualified charity, but it doesn't hit your income. Therefore, this year you can, you can give some of your charitable deductions or all of them, whatever it is, if it's up to 2000, you can give those away and cut down your income, which can positively impact your ability to take the full $6,000 each. These are little tricks that we have not had a chance to use over the past several years of tax planning. And they can really start to add up. Think in terms of every other year you do something or if every year you can do it, that's great. But the planning, while being available now and being much more fun to do, it's quite complicated. And we have in the firm a piece of software that's really, really good. And what they did, I followed along around the 4th of July as this bill was becoming law. And I noticed that very shortly after it was signed, they updated their system and took all of the current law, meaning the one that was just signed in. They put that in there so you can feed that information into the software and it'll tell you exactly where you stand. And then you can go back and you can say, well, what if I didn't pay my property taxes till next year? What if this and what if that and it'll give you the answers right now. It's so easy and so cool. And if, if anybody is interested in talking about such things, you want to come in and see us, then you know how. Yeah.

Adam Van Wie 29:08

And also with the new tax bill, the Tax Policy center estimated that instead of 40% of people who will owe no income tax, it is now 42% of people that owe no income tax this year. So that's a big change. When you talk about the number of Americans that, that, that 2% represents, that's a huge number of people that will owe nothing this year. If you find yourself in that category and you have IRAs, look at Roth conversions.

STEVEN H VAN WIE 29:35

Yes. That's another thing that you can model in the software. So there's, there's just a great opportunity now for people to do tax planning. And I, you know, we're kind of giddy with the whole thing because we're so accustomed to just being strained at the end of the year to try to make suggestions to our clients like well, this would help if they pass this law or if they don't do this and whatever. And this year we actually know what's going on. So just thought I'd bring that up and if, if you're dealing with someone else, an advisor, cpa, something like that, just look around, see if there isn't something that you might be able to do that would help.

Adam Van Wie 29:39

Definitely.

Adam Van Wie 30:18

So yeah, one of the. One of the examples in an article that I pulled up said that a married couple that makes $100,000, if that includes some overtime pay, with two kids under 13, could use child tax credits, standard deduction and either overtime or tip deductions to reduce their taxes to $0. $100,000 and you pay no taxes. That's pretty good. Pretty good, yeah.

STEVEN H VAN WIE 30:20

Don't throw tax money.

STEVEN H VAN WIE 30:44

All right. I want to to mention too that there are some tax credits that in the obbba, the new tax bill, they are going away. One of them just went away. September 30th was the end of the electric vehicle $7500 subsidy. And in an unrelated item, did you see Tesla sales for the third through the roof? Unbelievable.

Adam Van Wie 31:11

Yeah.

STEVEN H VAN WIE 31:12

Apparently, in case anybody was ever wondering if the $7,500 incentive for an electric vehicle was being used by people, the answer is the Proof is in. Now I would not be a buyer of Tesla stock today personally because that 7,500 went away. I'm afraid you're going to see kind of a reduction due to the sales that were moved forward. You know, Congress can do anything. Maybe they'll re implement a new one for somewhere down the line, but it's not going to be this year. That's pretty sure. Adam's got some numbers he wants to go over to. I'll hit a few more of these things you can do on your house and we'll talk about anything you want to if you just give us a call. So we'll be right back. Don't go anywhere. This is the Van WE Financial Hour. Welcome back to the Van We Financial Hour. I'm Steve Van We. Is it only me? Is the sinus conditions around here affecting anybody else's throat? My God. We need a freeze. But not right away. I wanted to mention one more thing on the tax plan and then I'm going to turn over to Adam. I forgot about. If Your age on December 31st this year is 60, 61, 62 or 63 and you're contributing to a retirement plan, don't forget about the catch up contribution which is an additional $3,750

Adam Van Wie 32:06

And I'm Adam Van Wee.

STEVEN H VAN WIE 32:41

for people in only those four ages brackets. But that's another way you can get that income cut back down easily and do yourself some good on the retirement end. I wish I wouldn't have limited that. That would have been a nice thing just to change and have the catch up contribution be bigger. Also remember that IRS is going to require catch up contributions of all kinds to be Roth. But they're not doing it in 26, they're doing it in 27.

Adam Van Wie 33:07

Is that official? It was unclear to me.

STEVEN H VAN WIE 33:09

It, I, I read what I think is the definitive ruling on it just a week or so ago and it looks like it's going to be put off till 27.

Adam Van Wie 33:17

I think they have to. I don't think everyone has a Roth option at this point.

STEVEN H VAN WIE 33:20

No, they don't. And that's the bottom line on this is if you are in a plan with an employer that does not allow a Roth option for your contributions, go demand one. Because they can change it easily. It is no big deal. There's a huge percentage of those plans that do have it. Yours should not be an exception.

Adam Van Wie 33:31

Yeah.

Adam Van Wie 33:34

Yeah, for sure.

Adam Van Wie 33:41

Agreed. At this point it should be. You should always have an option between the two. Like it, it's just Too easy to do for them not to do it.

STEVEN H VAN WIE 33:51

Yeah. And your, your income planning and retirement becomes a lot easier too because if you need some money, but you're up against a tax bracket or something like that, just take a little from the Roth side. It, it's really, really a wonderful feature to have both. And this, this should not be overlooked right now before they have to go that way.

Adam Van Wie 34:01

Yeah, exactly.

Adam Van Wie 34:13

Agreed. So I wanted to talk about a situation. I've been getting calls about this recently and my, even my own wife asked me about this the other day. When do you pay off your mortgage? If, if you. Let's say so what I did was I set, let's set up the scenario. Let's say that you are five years into a 30 year mortgage and you owe $200,000 of principal on your mortgage. And that mortgage is at a 3% rate. You were lucky. You got it during COVID A really good rate. And what happens if you inherit $200,000 tax free? You have it. Do you pay off that mortgage? Lots of people think, yeah, definitely pay off the mortgage. That's everybody's goal, right? Well, not so fast. You're actually shooting yourself in the foot if you pay off a 3% mortgage with that $200, $200,000. And why. Well, here's why. Let's say that instead of paying off your mortgage, you invest that 200,000 into a high yield savings account and you reinvest the interest and you, and you do that for the 25 years. And well, paying off your mortgage, you actually end up after that 25 years with 53,000 more dollars than if you had paid off your mortgage. That's not bad. Not, not life changing money, but not bad.

STEVEN H VAN WIE 35:36

Okay. And it does not involve a great deal of risk to do it the way you just know.

Adam Van Wie 35:40

And I was assuming that high Yield Savings paid 4%.

STEVEN H VAN WIE 35:43

Yeah.

Adam Van Wie 35:44

So what happens if you think, well, maybe I should invest some of that in the stock market? Okay, let's say you put half in a high yield savings and the other half you put in a stunt in a stock account. Make 7% on it at the end of 25 years, you actually have 212,000 more dollars than you would have if you had paid off your mortgage. Now what happens if you put it all in the stock market and made 7% and you kept that mortgage, paid it monthly, you end up with 372,000

Adam Van Wie 36:18

more dollars doing it by investing in the market that than if you had paid off that mortgage? That's a, that's that's a good amount of money. That goes a long way in retirement.

STEVEN H VAN WIE 36:28

It certainly is. Even 25 years from now, that's still going to be a lot of money.

Adam Van Wie 36:34

Yeah, exactly that. I, I, that is why you don't pay off your 3% mortgage and also why people feel trapped there.

STEVEN H VAN WIE 36:42

That is not counting a tax impact. I presume some of that growth might wind up being.

Adam Van Wie 36:49

Yes, I did not include taxes in that because it just made it too complicated because I don't know what your tax bracket is.

STEVEN H VAN WIE 36:57

And on the other side of that equation, the mortgage payment is no deduction for most people either. Yeah.

Adam Van Wie 37:04

Yeah. But it is for some. And so it was too hard to discern how to handle the tax and the, the tax implications. So that's going to make these numbers slightly smaller, maybe. Unless you can deduct that mortgage interest. And then maybe not. Yeah, it's just, it was too complic.

STEVEN H VAN WIE 37:20

Hard to, hard to talk generally about these things without just saying, look, this is in general. And every person should do his or her, her own tax planning.

Adam Van Wie 37:26

Yeah.

Adam Van Wie 37:31

Now that would make the numbers slightly smaller, but it would not negate.

STEVEN H VAN WIE 37:35

Doesn't change the, yeah, they're still going.

Adam Van Wie 37:37

To be, you're still going to have more money at the end of everything than if you had paid off your mortgage.

STEVEN H VAN WIE 37:42

Yeah, there's, there's no conclusion that will be altered by any of this.

Adam Van Wie 37:45

Yeah. And I did assume that if you, if you, if you paid off that mortgage, I put your mortgage payment and invested it in the same way in the scenario. So if you were, if you were saving in high yield savings, I took that mortgage payment and put it into a high yield savings account. So I was apples to apples on that side.

STEVEN H VAN WIE 38:04

Good. All right. Things you can still do by the end of the year, the tax credits that have not already expired last until the end of this year. And by lasting until then, what I mean is they have to be done and paid for. And you know, IRS considers anything paid for if the credit card charge comes in this year. So you can even put off the cash on the credit card until January if you want to, but you have to get it done this year or you may not get another one. What counts? Well, I, I may have mentioned this last week, but we, we changed out over the last few years. Our air conditioning systems and our, and our light bulbs were changed over to the cheaper one. Expensive light bulbs, cheap to run. And it saved us hundreds of dollars a month. Now, right. In this particular part of the warm season, it's Just astounding how much you can get. Well, the, the new ones are eligible for tax credits and if you want to look up what the tax credits are, go to energystar.com

STEVEN H VAN WIE 39:11

that's the people who rate appliances and so on, but exterior doors and windows, rooftop solar systems, skylights, water heaters. I asked Angela last week if she'd ever heard of a heat pump water heater and she said yes, she had. She hasn't seen one, but she knew that they're efficient. I had no idea that there were heat pump water heaters and they are included, I believe your tankless water heaters, the vernais and so on also included. And we did that too. And I, I promise you our gas bill paid them off in two years if that. It was incredible how, how efficient these things. Yep. Residential energy credits is the name of the game and you can see what you can get. But remember, the details are very, very, very important. They, the seer ratings and so on have to be complied with for every category. And if you do that and get it done this year, you can put some absolute cash in your money in your pocket and avoid some in taxes. How about that? All right. What's the latest thing baby

Adam Van Wie 39:52

Yeah, it's really nice.

Adam Van Wie 40:22

Nice.

STEVEN H VAN WIE 40:26

said about my voice? What's the latest thing baby boomers are doing to supplement the retirement strategy? Any idea? Side hustles.

Adam Van Wie 40:34

No clue.

Adam Van Wie 40:36

Oh yeah. I have noticed just anecdotally and I've noticed that quite a bit recently, my.

STEVEN H VAN WIE 40:43

Generation now are becoming uber drivers and.

Adam Van Wie 40:47

So on and like doordash delivery drivers and stuff like that and even pet.

STEVEN H VAN WIE 40:52

Sitting, dog walking, babysitting. So my, my question to a lot of people is very simple. Why do so many liberal politicians want to take away our ability to work as gig workers? 1099 types in every uber liberal state in the country. They keep pushing these bills into their, their own legislatures that would make it virtually impossible to be a gig work worker. They want everybody to be above board, employed by somebody so they can have their hours dictated to them. So they can and basically can't even make a decent living and write off everything they would otherwise is unbelievable.

Adam Van Wie 41:22

Yep, I agree.

Adam Van Wie 41:39

It's actually a great thing for older people, especially retirees, because if you need the extra money and you get a sense of purpose out of it because a lot of, a lot of retirees struggle because they don't have anything to do and this gives you something to do that also pays you. It's such a great thing.

STEVEN H VAN WIE 41:58

I think, I think it's a wonderful thing. Do not forget things like liability insurance, especially if you're driving a car. This can become very important. You want to make sure that you don't get caught up in something that you didn't plan for. And if you also are in a tax paying situation, make sure that you're adhering to the rules for quarterly estimates. If you start to become success, just look up the Form 1040 ES worksheet which is the quarterly tax payments. They're due in April, June, September and January and you can find out if you are going to be affected by those by checking out the rules for the 1040es. The Social Security payments depend on how much you make, so you'll have to check out those rules too on socialsecurity.gov but if you can go out there and get a side hustle all of a sudden, the cost of all the things that has escalated so much in the past few years will help. It'll help you to cover those things and hopefully you'll get out, get some fresh air, meet some people and have a little fun. All right, the the average Bull market gain is 114, but the median is only 76.7. So we have already surpassed the median, but we're a long ways from the average. Wonder how this one will turn out. I'm not a betting man on things like that, but it at least if you look at it from one side of that equation, there's a lot of room to run. So we'll find out. Just stay tuned right now. Enjoy the market. Enjoy everything. The weather's getting cooler. Football's back on. This is just a great time to be alive, isn't it? And so far the hurricanes are headed away from us. Let's hope that keeps on. See you next week. This is the Van we Financial Hour.

Adam Van Wie 43:20

Yeah, we'll see.

Adam Van Wie 43:41

Agreed.