September 2023

The stock market had a nice bull run this year. It is advisable to review your portfolio and conduct rebalancing strategies to reallocate the funds from overvalued to undervalued.

Most investors want to buy low and sell high, however, it is not easy to do so because of our fear and greed. With rebalancing, it is a disciplined way to sell high and buy low so that you can ensure your portfolio is on track with your investment objectives. Most investment platforms offer automatic rebalancing features. You can choose how often you want to rebalance your portfolio, such as quarterly or semiannually.

Full story: Investopedia

If you are age 50 and over, you are allowed to make catch-up contributions of $7,500 to your qualified pre-tax retirement plan on pre-tax basis. However, In light of the SECURE Act 2.0, the catch-up contributions will be after-tax if you make over $145,000. The good news is that the IRS delays the change from 2024 to 2026. If you would like to have tax savings, ensure that you take advantage of pre-tax catch-up contributions before 2026.

Full story: Forbes

With the current estate tax exemption of $12.92 million each, some have put off estate planning because they do not need to pay potential estate taxes now when their net worth is under the exemption amount. Estate planning is more than avoiding paying estate taxes. The essence of estate planning is to distribute your estate according to your wishes within your control, no matter how much your net worth is. It is a myth that estate planning is only for the wealthy or the ultra wealthy. Other than designating what goes to whom, estate planning is also instrumental to appoint custodians for your minors and power of attorneys when you become unable to make your financial and medical decisions. Once you have an estate plan in place, you will feel relieved and have peace of mind knowing you are protected whatever happens. 

Full story: Kiplinger

One rule of thumb is to assume that we will spend about 70% to 80% of our pre-retirement income when we retire. However, the spending pattern may not be a straight line. At the beginning of retirement, we may spend more because we have more energy to travel and do some projects such as house remodeling. Then, we expect we will be spending less when we get older. But later in life, we spend more on health care and long-term care. It has been called the “Retirement Spending Smile” effect. Spending is directly impacted by lifestyle choices, affluence and health. Understanding the spending pattern helps us choose a realistic withdrawal rate and plan for long-term care.

Full story: MORNINGSTAR

Unlike the S&P’s downgrades in 2011, the stock market did not react dramatically after Fitch’s downgrade from AAA to AA+ this August. Even with less turbulence created, we should be wary about the fundamental issues of the US economy as Fitch

Full story: Reuters