YOUR WEALTH CONNECTION

June 2022

As we pass the midway point of 2022 and look forward to the adventures that Summer brings, the Hilltop team is excited to deliver the June edition of our e-newsletter Your Wealth Connection. As always, we are hopeful that you will find useful information on retirement planning, tax strategies, the economy and what is new at Hilltop.

We encourage you to visit our website, HilltopWealthTax.comto learn more about our services, our team and upcoming events for clients and friends.

 

IN THIS ISSUE:

Happy Father’s Day! – Let’s meet the Hilltop Dads.

Informative
• Creating a Retirement Strategy
•  The Behavior Gap and Your Financial Health
•  Estate Planning and Gift-Giving Taxes & Strategies

Market Update
• Information about the Capital Markets and what is going on with our current economic conditions.

SPOTLIGHT!
• 
Learn more about one of our Private Wealth Advisors, Bill Davis.

Hilltop Tax
• Read about our full Bookkeeping and Accounting Services.

Refer-a-Friend
• The greatest compliment we can receive is your referral.

June Trivia

As always, we are honored and humbled that you have given us the opportunity to serve as your financial advisor.

From the entire Hilltop team, we hope you enjoy the information!

 
Best Regards,


Erik W. Brenner CFP® NSSA®
CEO, President and Private Wealth Advisor

Allow us the opportunity to build you a custom Retirement Roadmap and we’ll send you a $100 Gas Card.

While we celebrate all those who are called Dad on June 19th, we would like to give special attention and thanks to the Dads of Hilltop.  We hope you enjoy a few pictures of these special guys and their family!

Hilltop President & CEO, Erik Brenner, with his wife, Lana, and their four wonderful children – Clark, Marla, Grant and Jack.  Many of you know Marla, who works closely with our advisory team as the Hilltop Paraplanner.

Private Wealth Advisor, Bill Davis, with all the kids and grandkids over the Easter holiday!

Private Wealth Advisor, Cliff Hawkins, and his daughters Nola and Devin – *Devin works alongside her dad as an Intern with Hilltop!

Director of Operations, Shaun Fedder, with his wife Natalie, their daughters Sadie & Madelynn and family pooch, Chewbacca – aka Chewy.

Allow us the opportunity to build you a custom Retirement Roadmap and we’ll send you a $100 Gas Card.

INFORMATIVE

Creating a Retirement Strategy

Most people just invest for the future. You have a chance to do more.

Provided by Hilltop Wealth and Tax Solutions

Across the country, people are saving for that “someday” called retirement. Someday, their careers will end. Someday, they may live off their savings or investments, plus Social Security.  They know this, but many of them do not know when, or how, it will happen. What is missing is a strategy – and a good strategy might make a great difference.

A retirement strategy directly addresses the “when, why, and how” of retiring. It can even address the “where.” It breaks the whole process of getting ready for retirement into actionable steps.

This is so important. Too many people retire with doubts, unsure if they have enough retirement money and uncertain of what their tomorrows will look like. Year after year, many workers also retire earlier than they had expected, and according to a 2022 study by the Employee Benefit Research Institute, about 47% do. In contrast, you can save, invest, and act on your vision of retirement now to chart a path toward your goals and the future you want to create for yourself.1  

Since it’s impossible to predict the future, some people dismiss having a long-range retirement strategy. Indeed, there are things about the future you cannot control: how the stock market will perform, how the economy might do. That said, you have partial or full control over other things: the way you save and invest, your spending and your borrowing, the length and arc of your career, and your health. You also have the chance to be proactive and to prepare for the future.

A good retirement strategy has many elements. It sets financial objectives. It addresses your retirement income: how much you may need, the sequence of account withdrawals, and the age at which you claim Social Security. It establishes (or refines) an investment approach. It examines financial implications and possible health care costs, as well as the transfer of assets to heirs.

A prudent retirement strategy also entertains different consequences. Financial professionals often use multiple-probability simulations to try and assess the degree of financial risk to a retirement strategy, in case of an unexpected outcome. These simulations can help to inform the financial professional and the retiree or pre-retiree about the “what ifs” that may affect a strategy. They also consider sequence of returns risk, which refers to the uncertainty of the order of returns an investor may receive over an extended period of time.2

Let a retirement strategy guide you. Ask a financial professional to collaborate with you to create one, personalized for your goals and dreams. When you have such a strategy, you know what steps to take in pursuit of the future you want.

Erik Brenner, CFP® may be reached at 574.889.7526 or visit us at www.HilltopWealthTax.com.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

This presentation is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are as of the date noted and may change as subsequent conditions vary.  The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Hilltop Wealth Solutions to be reliable. 

Additional information about Hilltop Wealth Solutions is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary Report which are accessible online  via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 801-115255.  Hilltop Wealth Solutions is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.

 

Citations.

1 – EBRI.org, 2022

2 – Investopedia.com, October 4, 2021

The Behavior Gap and Your Financial Health

How might it affect you? 

Provided by Hilltop Wealth and Tax Solutions

 

“It turns out my job was not to find great investments but to help create great investors,” writes Carl Richards, author of “The Behavior Gap.” From increasing our budget mindfulness to taking a steadier approach to investing, Richards has drawn attention to how our unexamined behaviors and emotions can be to our detriment when it comes to living a happy and financially sound life. In many cases, we make poor financial decisions when experiencing panic or anxiety due to personal or widespread events. 1

 

The Behavior Gap Explained. Coined by Richards, “the behavior gap” refers to the difference between a wise financial decision versus what we decide to do. Many people miss out on higher returns because of emotionally driven decisions, creating a behavior gap between their lower returns and what they could have earned.

 

Excitement When Stocks Are High. Whether in a bull market or witnessing the hype from a product release, many investors may feel tempted to increase their risks or attempt to gain from emerging investments when stocks are high. This can lead to investors constantly readjusting their portfolios as the market experiences upswings. 

 

Fear When Stocks Are Low. In response to market volatility, investors may feel the need to choose more secure investments and avoid uncertain or seemingly unsafe investments. When stocks are low, a typical response may be to sell and effectively miss out on potential long-term gains.

 

Short-Term Anxiety and Focus. As humans, viewing aspects of our lives through the lenses of current circumstances is normal. However, one emotional response to any event is letting the moment consume us. Many may find it difficult to think long-term and remember. However, making a rash decision can inhibit the long-term benefit of maintaining a balanced perspective without reactionary behavior.

 

The market can go up or down at any given point, or it can remain the same. One thing we can control is how we handle our financial strategy. Remembering the likelihood of recovery over time — and the market’s nearly inevitable up-and-down movement — can provide a more logical angle to calm the nerves.

 

If you’re experiencing financial anxiety in response to the markets, take a breath and remember the potential for long-term gains. Of course, you can and should always reach out to your financial professional for further clarification.

 

Erik Brenner, CFP® may be reached at 574.889.7526 or visit us at www.hilltopwealthtax.com.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

This presentation is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are as of the date noted and may change as subsequent conditions vary.  The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Hilltop Wealth Solutions to be reliable. 

 

Additional information about Hilltop Wealth Solutions is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary Report which are accessible online  via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 801-115255.  Hilltop Wealth Solutions is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.

  

Citations

  1. BehaviorGap.com, May 16, 2022

 

 

Estate Planning and Gift-Giving Taxes and Strategies

An estate plan is an integral part of the financial planning process. It is conceived to carry out your wishes upon death.

Some folks choose DIY, or do-it-yourself wills or trusts. Ultimately, it is your choice, but given the complexity of estate planning, we strongly recommend that you seek guidance from an attorney.

An attorney that specializes in estate planning can lead you through the process and draw up plans that will establish the appropriate strategy for you.

As a part of the process, we will discuss gift taxes and gift giving. Estate planning and gift tax-rules are complicated, and this will be a high-level overview. Please consider consulting your attorney or tax advisor for any questions.

Under the current law, the lifetime exemption for gift and estate taxes last year was $11.7 million for individuals and $23.4 million per married couple. For 2022, the thresholds rise to $12.06 million per person and $24.12 million per couple.

The annual gift-tax exemption in 2022 is $16,000 per donor, per recipient, up from $15,000 last year. The recipient may be your child, relative or a stranger.

This means that a giver can give someone a gift that is valued up to $16,000 in a calendar year, and the giver will pay no federal gift taxes. If the gift comes from a couple, the limit doubles to $32,000. Even then, if you exceed the thresholds, it’s unlikely you will owe federal taxes on your gift, as we’ll explain in a moment.

Please note that in 2019, the IRS clarified that individuals taking advantage of the increased gift tax exclusion in effect from 2018 to 2025 will not be adversely impacted after 2025, when the exclusion amount is scheduled to drop to pre-2018 levels.

Because it is a gift, the recipient owes no federal income tax. However, the giver will not receive a tax deduction for the gift. Gifts to a qualified charity may be tax-deductible and are not subject to gift tax limits.

What if your gift exceeds the prescribed limit? Do you, the giver, owe a gift tax? The short answer is probably not.

You see, the annual limit is also applied to the lifetime exemption of $12.06 million per person and $24.12 million for a couple (for 2022).

For example, if Mom gives a $20,000 gift in 2022 to her daughter, Mom exceeds the $16,000 annual limit by $4,000. Taxes can still be avoided. However, Mom would be required to file U.S. Gift Tax (and Generation-Skipping Transfer) Form 709 with the IRS.

You may avoid the gift tax unless you top the lifetime exemption.

If you exceed the lifetime exemption, the gift tax rate ranges from 18% to 40%. Beware of exceptions and rules for calculating the tax. If you are running up against the limit, please consider talking to your tax professional.

What gifts are excluded?

  • Gifts that are not more than the annual exclusion for the calendar year.
  • Tuition or medical expenses you pay for someone.
  • Gifts to your spouse.
  • Gifts to a political organization for its use.
  • Gifts to qualifying charities.

 

7 strategies you may utilize

  1. Give extra. If you are wealthy and won’t need the assets, consider giving above the annual exclusion. While you will file a gift tax form with the IRS, you may rely on your large lifetime exemption.

 

  1. Give assets that are appreciating, as these assets remove any future appreciation to the estate. But beware of taxes. When received as a gift, the recipient will usually receive the cost basis of the donor. If the recipient sells, the assets will be taxed on the appreciation as a capital gain. If the gift is inherited, the tax basis will increase to the current value, potentially reducing taxes if the asset is sold.

 

  1. Gift assets from joint owners. This doubles the amount of the gift without running up against annual exclusion.

 

  1. Spread out the gifts over several years. Recipients get all that you want to give them, just over a longer period of time.

 

  1. Paying for tuition or medical expenses avoids the annual limit. But they must be paid directly to the institution, not the recipient.

 

  1. Be careful. Speak with your attorney or tax advisor if your assets include real estate or business holdings that could generate unwanted tax liabilities without proper planning.

 

  1. Playing the lottery? Think ahead. Finally, on the outside chance you win the lottery and you decide to share your winnings with siblings, your generosity is commendable. But it’s probably best that you buy the ticket jointly with your siblings or have some type of partnership agreement in place beforethe winning ticket is purchased. If not, the gift tax could take a big bite of your windfall.

 

We trust you’ve found this review to be educational and insightful. If you have any questions or would like to discuss any matter, please feel free to give any of our team members a call.

As always, thank you for the trust, confidence and the opportunity to serve as your financial advisor.

 

 

 

This presentation is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.  The opinions expressed are as of the date noted and may change as subsequent conditions vary.  The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Hilltop Wealth Solutions to be reliable. 

 

Additional information about Hilltop Wealth Solutions is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary Report which are accessible online  via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 801-115255.  Hilltop Wealth Solutions is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.

 

 

MARKET UPDATE

We were treated to one of the greatest bull markets in modern history during the last decade. It’s not that we didn’t experience sell-offs. We did. During 2011 and 2018, the S&P 500 Index came very close to entering a bear market, which is typically defined as a 20% or greater pullback in the broad-based S&P 500 Index.

From its closing peak of 4,796.56 on January 3, the S&P 500’s most recent closing bottom of 3,900.79 on May 19 translates into a peak-to-trough loss of 18.68%.

As we moved into the final days of May, a sharp rally helped minimize losses for the month, as illustrated in Table 1. The peak-to-date loss for the S&P 500 Index through May 31 is 13.85%.

Source: Wall Street Journal, MSCI.com, MarketWatch, Morningstar

MTD returns: Apr 29, 2022-May 31, 2022

YTD returns: Dec 31, 2021-May 31, 2022

*In US dollars

What fueled the rise in stocks over the last decade and what has changed today? We believe there has been a shift in the economic fundamentals.

During the 2010s, interest rates were extremely low; the Fed was buying Treasury bonds during the early part of the decade (popularly called quantitative easing or QE); inflation was low; and the economy was expanding at a modest, if unimpressive, pace. That economic expansion fueled a rise in corporate profits.

When the Fed began to raise rates, the shift in policy was gradual.  While stocks never rise in a straight line, the economic fundamentals created a strong tailwind for equities.

A brief review of the data from Yahoo Finance shows that on December 31, 2009, the S&P 500 Index closed at 1,115. Ten years later, the S&P 500 had nearly tripled to 3,231. On May 31, it closed at 4,132.

On December 31, 2009, the Dow Jones Industrial Average closed at 10,428. It ended the decade at 28,538. On May 31, the Dow closed at 32,990.

 

What’s going on today

Today, the economy is expanding, and corporate profits are rising, according to Refinitiv. But an upbeat Q1 profit season failed to stem the latest slide in stocks. Why? We believe you can point to a shift in the once-favorable fundamentals.

First, let’s start with the Federal Reserve. During prior rate-hike cycles, such as the early 2000s and the second half of the 2010s, the Fed took great pains to reassure investors that increases would be “measured” or “gradual.”

The investor-friendly language has been jettisoned.

In hindsight, the Fed should have started tightening the monetary screws with rate hikes last year. It didn’t. It insisted that last year’s rise in inflation was “transitory.” It wasn’t.

In response to the sharp rise in inflation, the Fed is being forced to play catch-up.

In May, the Fed hiked its key lending rate, the fed funds rate, by 50 basis points, which was the first 50 bp rise in over 20 years.  The 75 bp raise for June was the highest since 1994 and it is anticipated that a 50 bp, or larger, increase could be in store for late July.

In a recent interview, Fed Chief Powell said, “What we need to see is inflation coming down in a clear and convincing way, and we’re going to keep pushing until we see that.” It’s tough talk.

We want a return to price stability, and comments like that strongly suggest job #1 at the Fed is price stability. But over the shorter term, an aggressive policy to rein in inflation increases economic uncertainty and angst among investors.

In addition to rate hikes, the Fed will also let some of the maturing bonds it holds run off its balance sheet without replacing them. It’s the opposite of QE, and it’s called QT—quantitative tightening. As with rate hikes, it’s a shift away from the Fed’s easy money policy.

While the Fed should take some responsibility for today’s high inflation, we won’t blame it entirely on them. Excessive fiscal stimulus encouraged a consumer-led buying binge (and a fast return to full employment), and supply chain woes that limited the availability of some goods are part of the problem, too.

Further, severe labor shortages have lifted wages, and businesses are passing along the higher costs.

Market volatility is also being exacerbated by Russia’s invasion of Ukraine, which has pushed up energy prices and appears poised to slow global growth. Recent lockdowns in China have aggravated supply chain issues.

Lastly, whether it is warranted or not, odds of a recession have risen, which is adding to uncertainty.

HILLTOP SPOTLIGHT

MEET PRIVATE WEALTH ADVISOR

BILL DAVIS

As a member of Hilltop’s Advisory Team, Bill provides critical financial guidance to his clients on their retirement planning, tax strategies, positioning their portfolios to best meet their needs & goals and everything in between.  We caught up with Bill just as he finished walking a client to their car after a meeting.

Hilltop: Good afternoon Bill – thank you for taking a few minutes to chat with us and allowing others to get to know you as well as we do. Let’s jump right in – If you could meet any person in the world, past or present, who would it be?

Bill: I’d have to say the legendary lead guitarist for the Grateful Dead, Jerry Garcia. To those who know, he was much more than the frontman for a rock band – he was a composer, an artist, an icon for a generation and also a deeply caring individual who gave more than he could ever take.

Hilltop: Agreed. Jerry is missed, but his legacy and music live on.  I know you’ve seen the Grateful Dead a few dozen times and those, I’m sure, are great memories. Bill, tell us – what is one thing many people don’t know about you?

Bill: I really love to cook. My family know this, but on most summer weekends, you’ll find me prepping and overseeing my grill and smoker. 

 

Hilltop: Oh yeah. The office has been treated to that on a several occasions. Bill, can you share with us who would you consider your hero, and why?

Bill: Abraham Lincoln for his courage to do the right thing even if it was not the most popular. Integrity and knowledge is an incredible combination.

Hilltop:  Indeed. Let’s talk a bit about guilty pleasures. What is one tv show or movie that you are ashamed to love?

Bill: Okay, I must admit I really do enjoy Swamp People. It’s a show on the History Channel that tracks a group of alligator hunters living in a river basin down in southern Louisiana.

Hilltop:  I’ve heard of that show, but never watched it. That may have to change. One final question and we’ll let you get back to work. How many siblings do you have and are they older or younger?

Bill: I have a sister and I am older, but just by one year.

HILLTOP TAX SOLUTIONS

Did you know?

Did you know that our seasoned tax professionals can help beyond just preparing and filing your Federal and State Income Tax Returns?  If you are in need of bookkeeping or accounting services, Hilltop Tax Solutions offers a flat monthly or quarterly fee to help streamline your business.  

Call our office today at 574.208.5001 to learn more and SAVE 10% on your 1st year services!

CLICK HERE to find out how your family member, friend,
or coworker can get in contact with us!

JUNE TRIVIA: As always, please submit your responses to Marla Brenner and those who answer all three questions correctly will be entered into a drawing to win this month’s prize. Good Luck!

1. Who’s daughter works for Hilltop as an Intern?

2. How much did The Fed raise the Federal Funds Rate at their June meeting?

3. Who does Bill Davis consider to be his hero?

Investing involves risk, including the possible loss of principal and fluctuation of value.  Past performance is no guarantee of future results.

This letter is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Hilltop Wealth Solutions to be reliable. The letter may contain “forward-looking” information that is not purely historical in nature.  Such information may include, among other things, projection and forecasts. There is no guarantee that any forecast made will materialize.  Reliance upon information in this letter is at the sole discretion of the reader.
 
Please consult with Hilltop Wealth Solutions financial advisor to ensure that any contemplated transaction in any securities or investment strategy mentioned in this letter align with your overall investment goals, objectives and tolerance for risk.  

 

Additional information about Hilltop Wealth Solutions is available in its current disclosure documents, Form ADV and Form ADV Part 2A Brochure, which are accessible online  via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 801-115255. Erik Brenner, Managing Member of Hilltop Wealth, is also an owner of Hilltop Tax Solutions, LLC (“Hilltop Tax”), a limited liability company and affiliate of Hilltop Wealth. Hilltop Tax provides tax and bookkeeping services. Clients of Hilltop Wealth are advised there is a conflict of interest in that there is an economic incentive to recommend Hilltop Tax. Hilltop Wealth professionals strive to put their clients’ interests first and foremost, and clients may utilize tax and accounting services of their choosing.
 
Hilltop Wealth Solutions is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.

View Past Issues of Your Wealth Connection:

January 2022

February 2022

March 2022

April 2022

May 2022