Over 10 years ago, I started this company with a vision of “Doing Good for You, So You Can Do Good for Others.” We have had a lot of exciting opportunities during that time, but on Tuesday, January 30th, Angel and I were at the New York Stock Exchange (NYSE) with our good friends from Inspire Investing. Our common vision and focus allowed me the opportunity to be on the podium and “bang the gavel” to officially close trading.
The opportunity to close the market, while humbling, was an opportunity to further observe a system that, all too often, takes our view off of what is important. The headlines from January 30th would tell you that the market dropped a little over 1%. Since then the markets have posted their first 10% correction in over two years, but honestly, in a few months, I doubt anyone will even remember.
Our job is to help you stay focused on what is important to you. How do we know if we are doing well? We see it in the outcomes of our families and businesses. We see strengthened relationships. We see people experiencing less fear and more peace.
How do we know if we are “Doing Good for You, So You Can Do Good for Others?” We measure things that matter. With 2017 now behind us, here is the “Good” that happened through the families and businesses we served over the last 12 months.
Planning that presented opportunities to save or avoid over $34 million in taxes.
Planning that presented opportunities to give over $90 million to non-profits and ministries.
In addition, the Employee “Doing Good Fund” was able to support over $48,000 of local, national and worldwide projects that made a difference for today and for eternity.
In 2018, we are setting our sights even higher in serving you. We want to achieve more alongside you.
I invite you to watch the video below of the closing bell at the NYSE. It was definitely a “bucket list” experience. However, I never want to lose sight of why we do what we do. We do it for you. We do it for others!
As most of you know, Congress and the President worked to make changes to the tax code over Christmas. Overall, the changes look good, but there is still more information coming out on the details. We love serving our families and take seriously our mandate to help you and your business Prioritize Value, Minimize Taxes and Optimize Giving.
Over the next few months our team will be working to make sure we understand the nuances and opportunities available in the Tax Cuts and Jobs Act of 2017. However, I thought I would highlight just a few of the changes that we believe are worth noting and might be of interest to you:
- Reduced Income Tax Rates: The top individual tax rate was reduced from 39.6% down to 37%. Most families should see a 2.5% to 3% reduction in their average tax rate from 2017 to 2018.
- Increased Estate and Gift Tax Exclusion: The individual estate and gift tax exclusion doubles to $11.2 million. For married couples this means that there should not be any estate or gift tax issues for estates less than $22.4 million.
- Reduced Corporate Tax Rates: The corporate tax rate drops from 35% to 21%.
- Reduced Pass-Through Entities Rate: The bill provides a 20% deduction for taxpayers who have qualified business income from a partnership, S corporation or sole proprietorship. There are phase outs for specified professional service businesses.
- Increased Charitable Deductions: The AGI limitation for CASH contributions to public charities increases from 50% to 60%.
- Elimination of the Pease Limitation: The Pease Limitation was effectively a 1% to 1.2% surtax for upper income individuals, so the elimination effectively provides further reduction in marginal tax rates for upper-income individuals.
As I mentioned, these are highlights of just a few of the changes in the Tax Cuts and Jobs Act of 2017. We will continue to monitor the application of these and other opportunities as we construct and update your plans throughout the year. It is always in your best interest to work with your tax professional before implementing any specific tax strategy.
Please let us know if you have any questions. It is our honor to serve you.
Eric Dunavant, CFP®
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E Six Thirteen d/b/a Dunavant Wealth Strategies (“DWS”) is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).
This communication is provided for informational purposes only and for the intended recipient[s] only. This communication is derived from numerous sources, which are believed to be reliable, but not audited by DWS for accuracy. This communication may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change.
This information is general in nature and should not be considered tax advice. The views and opinions are subject to change at any time based on market and other conditions. Investors should consult with a qualified tax consultant as to their particular situation. The information provided does not constitute investment advice and it should not be relied on as such. There is no representation or warranty as to the accuracy of the information and DWS shall have no liability for decisions based on such information.
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Over the last few months I have had several people ask my opinion on Bitcoin and the cryptocurrency markets. For a while I didn’t think much about it, but as the value has continued to increase substantially I thought it was probably time for me to share my thoughts. How you view Bitcoin, really depends on what you think it is. Is it currency? Is it an investment? Or is it speculation? I’m going to spend a few minutes breaking down each and give you some things to think about.
When I first heard of Bitcoin, it was described to me as a type of digital currency that can be used without the tracking of the Federal Government. That sounds good on the surface, but realize this means that many people who would see value in this as a currency would do so for reasons that may be less than legal. There is a reason they would prefer not to be tracked.
My biggest challenge with defining Bitcoin as currency comes in the definition of currency itself. Merriam-Webster defines currency as “something that is in circulation as a medium of exchange” or “a common article for bartering.” In simplest terms, the reason the US dollar and other government currencies works as currency is that, for the most part, something that cost $5 can be paid with a five-dollar US bill today, tomorrow and most likely next week. We do experience inflation in many of our goods, but most of that inflation happens slowly during the year. It is a very rare occurrence when something you want to buy today for $5 of US currency will cost $10 of US currency tomorrow. I’m not going to spend time on hyper-inflation scenarios that have occurred in rare occasions in other countries, because as of today, that is not a scenario we seem to be facing in the US.
The volatility of Bitcoin is a major concern for its consideration as a currency. It has risen over 2000% Year to Date as of December 2017. Anything that can go up that quickly can go down that quickly as well. If I need to buy bread or eggs tomorrow I don’t want to guess what the value of my currency is going to be. Anything with this type of volatility would not be considered as a “medium of exchange” or “an article for bartering.” In my mind, it is difficult to take the position that Bitcoin is currency.
If Bitcoin is not currency, then perhaps it is an investment? When I consider investing I have a set definition that I have found serves me and my clients very well. I’m looking for entities that can provide return of capital and increased cash flow over time. Here is where I struggle with Bitcoin as an investment. Bitcoin is not a company that has profits. The only reason Bitcoin has value is because other people feel it has value as a currency. Based on the definition of currency above, that leaves us with a problem. It doesn’t act like a currency. It isn’t backed by the full faith and credit of any government or institution. If the faith in its ability to be a currency goes away, so does the value.
I am not so naïve to say that Bitcoin could never be an investment. However, as of today it doesn’t fit my definition. If I’m going to be honest, it looks a lot like 1999 or 2000 when companies that didn’t have any profits or earnings were getting an Initial Public Offering (IPO) on the stock market just because they had “.com” in their name.
If Bitcoin is not a currency or an investment, then it seems that Bitcoin is speculation. Merriam-Webster defines speculation as an “assumption of unusual business risk in hopes of obtaining commensurate gain.” Think of speculation as gambling. You can win big, you can also lose big. One thing I always ask when I look at any type of speculation is “who is really making any money?” In Vegas, “the house always wins.” It might be worth figuring out who the “house” is for the crypto currency markets. The trading exchanges will certainly make money off those who want to speculate. I read yesterday that people are taking out second mortgages to buy Bitcoin, so the banks are making money. The question is will any investors actually keep any profit that they can take home and put in their bank account when the dust settles. I’m afraid I’ve seen this story before, and I don’t like the ending. I’ve always said, “When the guy bagging your groceries is giving you investment tips, it’s time to exit the investment.” Although most of our groceries are now delivered to our home, I’m seeing a lot of people who have never had deep money conversations acting like Bitcoin experts. If you feel you must venture into these waters, please be careful.
I’ll conclude my thoughts by quoting from one of the wisest and richest men who ever lived, King Solomon. He wrote a book of lessons he had learned throughout his life to his sons. He said, “Steady plodding brings prosperity; hasty speculation brings poverty.” At the end of the day, I may end up being wrong about the ability of Bitcoin (and other cryptocurrency) to become a currency or an investment. As of today, however, it is speculation and my job is to help protect the families we serve from poverty and I take that job very seriously.
 Proverbs 21:5, The Living Bible copyright © 1971 by Tyndale House Foundation. Used by permission of Tyndale House Publishers Inc., Carol Stream, Illinois 60188. All rights reserved.
Eric Dunavant, CFP®
Dunavant Wealth Strategies
In August 2005 (as most of you probably remember), Hurricane Katrina devastated much of the Southeast along the Gulf of Mexico. As someone who was living in Southeast Louisiana, I remember the fear and anxiety that people felt toward any tropical storm or hurricane that neared our coast in the ensuing years. After a while, however, the “recency effect” of the storm seemed to wear off. For better or for worse, most people have moved on from the nightmare of Katrina.
In the same way, there is a tendency for investors to forget what it’s like to go through a bear market (20%+ drop). The last “technical” bear market happened in 2008 and 2009 when the S&P 500 dropped over 56% (although the 19.4% drop in 2011 constitutes a bear market in my book)1. Recently, however, there has been a lot of optimism and euphoria toward investing in the stock market. Part of this is due to the fact that the S&P 500’s total return year to date is over 9% (as of July 11th)2. The positive stock market returns feel so good that it’s easy to forget how badly a 56% drop hurts.
Although you may be tempted to change your investment allocation due to the recent performance of stocks, I would like to encourage you to stick to your current plan. Short term fluctuations in the volatile stock market should not change our long term investment strategy. Although I am a huge advocate for the long term investment returns associated with equities, I am also aware of the volatility in the stock market. Not everyone can stomach the rollercoaster ride of heavy equity exposure. Our team has found that the most effective strategy for long term investing begins and ends with a well-thought-out financial plan. Because of this, our primary goal is to help families develop a plan that they can stick to regardless of the volatility of equity investments.
If you would like more information about creating a financial plan specific to your family’s situation, please contact our office at (985) 727-0770 or email Andrew Stoner at email@example.com.
2017 has arrived! Now that we are transitioning into a new year, it is important for us to not only look forward, but also to remember the principles that give us a firm foundation to stand upon. Please take the time to review this letter. We believe that it will give you a fresh reminder of timeless principles and clear lenses from which to view this New Year.
Should We Expect a Political Correction?
It seems like everyone wants to know what’s going to happen to the stock market at the conclusion of the upcoming presidential election. Will the results plummet us into a recession? Or will they propel us into an expansion? The only thing we know for sure is that no one knows what is going to happen. Any predictions you hear are purely speculations. There is no crystal ball that can show us the future of the stock market, so we won’t know the outcome until it happens.
However, it is important for us to take a realistic perspective of the stock market. When we understand how the market works, we can prepare ourselves for what is to come. With that in mind, let’s focus on these two important points: (1) The stock market is comprised of businesses, and (2) the market does not like uncertainty.
2016 is passing faster than anyone can imaging. Angel and I are already turning our attention towards our summer vacation. This summer we are planning to take another trip to Mexico for our Do Unto Others Adventure on July 16 – 18 with Amor Ministries.
Many of you have talked about joining us. Today, I extend the invitation again. There is no time like the present. Here is a link with information on the upcoming trip.
Last year Angel put together a great list of FAQ’s that I thought would be helpful and perhaps twist your arm a little.
Our focus is to help you find areas to improve your family and business value, your taxes and your giving. In 2015 Congress made permanent some legislation that may help you manage your taxes while also optimizing your giving. If you are over 70 ½ and own a retirement account, you may be required to take a certain amount of money out or face a 50% tax penalty. This is called the Required Minimum Distribution (RMD). Most families think that the only option is to take the RMD and pay the taxes on the distribution. With the new legislation, you can now send your RMD directly to a qualified charity in the form of a Qualified Charitable Distribution. Less taxes, more giving… win, win.
If you want more information on how this works, I have attached an article from the American Institute of CPA’s which does a good job of spelling everything out.
This information is not intended to be substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Many of us had the opportunity to watch the recent supermoon lunar eclipse, which inspired pictures, videos, and late evenings. Part of what makes a lunar eclipse so special is that we rarely pay attention to the moon. We only stop and stare when we see a dramatic change in the night sky, but most of the time the moon subtly changes each night as it progresses through its cycle month after month. Similarly, economic cycles can be counted on to continue month after month, and we need to remember that market downturns are part of the natural cycle of investing.
The soft September 2015 jobs report—with just 142,000 net new jobs created during the month, below the consensus expectation of a 201,000 gain—sparked more questions about the current economic cycle. July and August readings were also revised lower and added to investor disappointment.