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Tariff Rubber Stamp on Brown File Folder

Tariffs are pivotal in shaping domestic and global trade policies and economic events. Implementing tariffs may impact countries, manufacturers, businesses, and investors alike.

Therefore, understanding the correlation between tariffs and an investor's portfolio performance is vital. Here, we provide a brief history of tariffs, their significance, and how they impact investors.

Tariffs and policies

Tariffs have a long history in the U.S. as they were once a significant source of governmental revenue; in 1913, income tax replaced tariff monies. In 1930, the Smoot-Hawley Tariff Act increased tariffs on over 20,000 imported goods, triggering a trade war that prolonged the Great Depression.

The U.S. has continued its policy on tariffs for various reasons, such as to protect domestic interests, as leverage in negotiations, and to capture a share of global wealth.

Other policies have emerged, signaling a shift toward imposing tariffs on imported goods worldwide:

  • 1947- The General Agreement on Tariffs and Trade (GATT)
  • 1995- The World Trade Organization's agreement on trade equalization and reducing tariff barriers.

A tool with far-reaching implications

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Social Security Website Viewed Through Magnifying Glass

Social Security, established in 1935, provides financial benefits to the elderly, disabled, and disadvantaged groups. However, there are concerns regarding its sustainability.

Social Security is particularly concerning among younger generations who are not yet receiving benefits and must continue paying SSI taxes despite their future benefits being reduced or, at worst, discontinued. So, should you be concerned about the state of Social Security? The answer, while multifaceted, tends to lean toward the affirmative.

Reasons for concern

There are several reasons for concern about Social Security's sustainability.

Demographic changes—The number of baby boomers born between 1946 and 1964 are reaching retirement age, and their numbers are significant. As they draw Social Security retirement benefits, fewer workers contribute to the program, straining the system's financial resources.

Longer lifespans—Due to advancements in healthcare and technology, People are living longer than ever. While longer lifespans are a positive development, they also mean that individuals draw upon Social Security benefits for extended periods. This increased longevity, combined with the influx of retiring baby boomers, puts increasing pressure on an already burdened Social Security system.

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Inflation Graphic with Rising Arrow and Percent Signs

Inflation is the rate at which the cost of goods and services rises. Inflation is measured by the consumer price index (CPI), which monitors the average prices of goods and services across categories like food, vehicles, apparel, and healthcare services.

Due to inflation, your hard-earned money will buy you fewer groceries, gas, medical services, or anything else than previously. While inflation affects most industries, how much it affects them varies. After all, not all goods and services increase at the same percentage. Inflation may impact multiple sectors, impacting your wallet simultaneously.

Food industry—When inflation hits, Food prices go up due to the increased costs of agriculture, labor shortages, and infrastructure issues, like a shortage of truck drivers. It may be no surprise that your grocery bill is more expensive than it used to be.

Air transportation—An increase in oil prices often leads to a rise in airplane fuel prices, which eats into the earnings of many airlines. Also, since travel is usually a nonessential expense, many people tend to spend less on airfare or avoid airfare costs altogether, further hurting the bottom line of the air transportation industry during inflationary periods.

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Inherited IRA Document with Pen and Calculator

Understanding the guidelines surrounding Required Minimum Distributions (RMDs) becomes crucial as we navigate the complexities of personal finance and retirement planning.

For those who have inherited retirement accounts or are approaching their RMD age, the ten-year rule is a pivotal part of this financial landscape. Here are the ten things you need to know about it.

1. The origin of the ten-year rule—The rule took effect in 2020 with the passing of the Setting Every Community Up for Retirement Enhancement (SECURE) Act. This legislation revamped many rules regarding retirement accounts, including RMDs.

2. Who the rule applies to—The ten-year rule primarily applies to non-spouse beneficiaries of Individual Retirement Accounts (IRAs) and defined contribution plans such as 401(k)s, 403(b)s, and other employer-sponsored retirement plans.

3. The purpose of the rule—The rule mandates that these beneficiaries empty the account by the end of the 10th year following the original account owner's death. This rule ensures that tax-deferred growth benefits don't extend indefinitely and that the government can reclaim some of its deferred tax money.

4. No yearly RMDs—Under the ten-year rule, there's no requirement to withdraw a certain amount each year. As long as the entire account balance liquidates by the end of the tenth year after the account owner's death, the beneficiary is compliant with the rule.

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Stock Market Volatility and Investment Trends

Given the dynamic nature of global markets and the ever-changing economic landscape, addressing portfolio management and market volatility is essential. During these periods, wealth preservation paths can prove complex. Managing and addressing portfolio risk, taxes, estate and retirement planning, and monitoring progress toward goals is essential.

Therefore, a comprehensive understanding of fundamental strategies for navigating market volatility often includes the following:

1. Diversification. The old investment adage, “Don't put all your eggs in one basket,” is particularly relevant today as it was decades ago. Diversifying your investment portfolio mitigates the risk by spreading the investments across various types of investments, sectors, or geographies.

For example, consider including bonds, ETFs, real estate, or alternative investments in your portfolio instead of investing only in equities.

2. Staying informed. Additionally, staying informed about market trends and economic indicators is key to wealth management. Understanding how geopolitical events, policy changes, or other developments affect market conditions provides insight into making informed investment decisions. Staying informed enables one to anticipate market shifts and position one's portfolio accordingly.

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Four-Leaf Clover Symbolizing Luck and Prosperity

There is often debate on the role that luck plays in accumulating wealth. Some argue that wealth accumulation is a matter of hard work, commitment, and good decisions, while others believe luck is a factor.

However, there are actions that those with wealth initiate in their wealth accumulation approach.

1. Financial Literacy—Financial literacy is the cornerstone of wealth accumulation. It equips one with understanding how money works, tools to make informed financial decisions, and strategies to optimize wealth. A basic knowledge of economic concepts, investing principles, taxes, budgeting, risk management, and retirement planning is vital. Wealth accumulation isn't about relying on luck but developing the skills and aptitude to grow financially.

2. Ability to adapt to changing circumstances—Wealth accumulation isn't just about sticking to one strategy. Instead, it requires constant adaptation based on changing scenarios. A sudden market downturn or an industry's spiraling growth shouldn't catch you off guard.

Being prepared, flexible, and willing to change your investment approach is essential. This often determines whether assets will continue accumulating or lose value.

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Maximizing Social Security Benefits Gauge

Social Security (SS) retirement benefits are a vital component of retirement income for many people. It consists of multiple benefits, including disability, survivor, and retirement benefits, and is an indispensable part of many individuals' financial plans.

Knowing how to boost SS benefits can be advantageous over one’s lifetime.

Understanding benefit start options

Deciding when to start receiving Social Security benefits is essential. There are three options: early retirement, full retirement age, or delaying benefits. Each offers a different perspective depending on individual circumstances, making it vital to understand each option thoroughly.

Early retirement

Opting for early retirement benefits involves starting to collect benefits at age 62. Doing so provides immediate income but results in a managed monthly benefit amount. This reduction could range from a modest 25% to a drastic 30% cut, depending on your full retirement age defined by the Social Security Administration based on your birth year.

While this option may be appropriate for those who need immediate income or have a shorter life expectancy, it might not be the most optimal strategy for those who live long lives. To make an appropriate decision, assess your financial needs, health status, and family longevity history.

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529 College Savings Plans for Education Funding

A 529 plan offers tax advantages in addition to saving for future education costs. These plans help parents save for their children's college expenses and may be appropriate in estate planning.

529s as a wealth transfer strategy have become more accepted due to their characteristics, tax advantages, and potential for flexibility in distribution. Here are some of the key estate planning benefits of 529 plans:

Account owner control

What sets the 529 plan apart is that the account owner retains control over the assets. Unlike other gifting techniques, where the giver loses control over the gifted assets, with a 529 plan, the owner can change beneficiaries or reclaim the funds (with penalties and income taxes applied). This control can be instrumental, especially when unforeseen circumstances arise.

Reduces the size of taxable estate

One of the primary benefits of a 529 plan is its potential to reduce the size of one's taxable estate while retaining control over the funds. Contributions you make to a 529 plan are considered gifts for tax purposes.

In 2025, individuals can contribute up to $19,000 per beneficiary without triggering a gift tax. Under a special election, individuals can 'super-fund' their contributions upfront to $95,000 per beneficiary (or $190,000 for married couples), constituting five years' worth of gifts and removing them from one's lifetime taxable estate.

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Desk with Tax Forms, Calculator, and Laptop for Tax Planning

Retirement is a chapter of life that, for some, may signal leisure, freedom, and working by choice, not necessity. However, this phase usually requires retirement income from retirement savings withdrawals. Different retirement account types have different taxation when withdrawing monies: taxable, tax-deferred, and tax-free.

This article discusses investment strategies and taxation, which affect the growth and value of retirement savings accounts.

Taxable accounts

Taxable accounts have fewer restrictions on contributions and withdrawals, but the returns are subject to taxation. Investing in taxable accounts is done with after-tax money and includes:

· Brokerage accounts

· Individual stocks

· Real estate and other hard assets (metals)

· Mutual funds, exchange-traded funds (ETFs), index funds

Tax-deferred accounts

Traditional Individual Retirement Accounts (IRAs) and 401(k)s are the most common retirement savings accounts and offer tax-deductible contributions. A tax deduction implies that the amount contributed to these accounts is deducted from taxable income for that year, thereby reducing one's tax bill. If you fall into a high tax bracket, the tax savings from making these deductions can be substantial.

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Financial Planning with Charts, Smartphone, and Pen

Many seek financial professionals to help them with investment guidance and financial management. This management involves reviewing investments, savings, insurance, and other elements as they work toward their goals. However, not all financial professionals are created equal. Here's what to look for before hiring one.

Skills and training—Competence is key when selecting a professional. They must demonstrate knowledge about the financial markets, investment strategies, tax laws, insurance, and other relevant areas. They should also have the necessary qualifications, credentials, and certifications. This training and education indicate they have undergone thorough training and passed the examinations needed to offer guidance in these areas.

Experience—Secondly, it's essential to consider the financial professional’s experience. Questions to ask while interviewing them include:

· How long have you been providing financial guidance?

· What types of clients have you served?

· Do you specialize in certain areas?

Understanding their experience level and areas of knowledge can help determine if they're the appropriate professional for your unique needs.

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