Between March 8^thand March 12^th, 2023, three large U.S. banks failed, generating a lot of media attention. Many pundits wrote about the pending collapse of the U.S. banking system and dire consequences for the stock markets. Some compared this situation to the 2008 bankruptcy of Lehman Brothers on September 15^th, 2008, and the beginning of the Great Recession.

As they always do, prognosticators are claiming that this time, it’s different — they say that this time, we’re in real trouble. But this time isn’t different. We are not in trouble! The truth is, although the nature of risks and market downturns changes through the years, we can always prevail simply by having a sound financial plan in place, keeping some cash reserves available and staying the course.

You can almost always find opportunity within a crisis.

About the recent bank collapses

To put this in context here is an overview of the three bank collapses that occurred in the second week of March 2023:

• On March 8th, Silvergate, a California-based bank that made loans to cryptocurrency companies, announced that it would cease operations. Silvergate catered largely to cryptocurrency companies, including the failed exchange FTX. The media generally ignored the fact that this was a very niche situation.
• On March 10th, Silicon Valley Bank (SVB) was placed into Federal Deposit Insurance Corp. (FDIC) receivership. After prominent venture capitalists, including those from Peter Thiel’s Funders Fund, told customers to pull their deposits out of the bank, SVB was hit with a wave of requests for cash. By the end of the day on Thursday, March 9^th, depositors withdrew more than $42 billion. This was another unique situation.
• On March 12^th, state regulators closed New York-based Signature Bank, the 16^th-largest lender in the United States. A sudden and unexpected onslaught of customer withdrawals erased more than $100 billion in market value from U.S. banks. The FDIC took control of Signature, which had $110.36 billion in assets and $88.59 billion in deposits at the end of 2022, according to New York state’s Department of Financial Services.

Later on March 12^th, the U.S. Treasury, Federal Reserve and FDIC issued a joint statement saying that all the depositors of Signature Bank and Silicon Valley Bank would be made whole and announced actions to shore up deposits to try to prevent further fallout.

Yet no depositors have lost any funds, and again, Silvergate and Silicon Valley were niche situations and not indicative of the overall banking climate.

Avoid reacting to media reports

As we have said for three decades, the media often offer incomplete information, with a bias toward the negative and short-term aspects. This type of attention can create unnecessary anxiety and drops in markets, which cause many people concern. However, we believe market downturns provide a great opportunity for long-term investors.

We have seen this repeatedly — those who take advantage of dips benefit, while those who panic and/or sell permanently lose wealth. The key to be in a position where you do not need to sell. As always, we recommend having cash reserves and/or fixed income to cover 9 to 12 months of your family’s needs. Currently, there are some relatively high rates available for cash and cash equivalents, with money markets yielding 4.5% or greater!

When the markets take a tumble, it’s not all bad news. Some sectors of the economy actually tend to outperform others as consumer needs shift. These include health care and consumer staples stocks (or funds tracking those sectors), large-cap stocks and income investments.

Market volatility is normal and expected, contrary to media focus. Since 1928, this country has seen a market drop of 5 percent about every 2 months, on average; 10 percent about every 8 months; and 20 percent every 30 months.

Keep in mind that the media will often talk about a “points drop,” not a “percentage drop,” and as the markets move higher, this is more dramatic. For example, in June 2018, the Dow was at 24,000, so a 10 percent swing would be 2,400 points. Today, with the DOW at 32,000, a 10 percent swing is 3,200 points. Given the bank issues this month, the market moved a few hundred points, which is still relatively insignificant.

Have a good plan in place to avoid locking in losses

The key to building wealth is to avoid locking in losses. By having a good plan and good cash reserve you should never have to sell.

Here are some of the biggest news topics from 1981 through 2021:

1981    Beginning of steep recession

1982    Worst recession in 40 years

1983    Market hits new highs

1984    Record federal deficits

1985    Economic growth slows

1986    Dow nears 2000

1987    Record-setting market decline

1988    Iran hostage crisis

1989    October “mini-crash”

1990    Persian Gulf War

1991    Fall of the Berlin Wall

1992    Global recession

1993    Health-care reform

1994    Fed raises interest rates six times

1995    Dow tops 5,000

1996    Dow tops 6,000

1997    Hong Kong reverts to China

1998    Asian Flu outbreak

1999    Y2K scare

2000    Tech bubble bursts

2001    Terrorist attacks on US soil

2002    Corporate accounting scandals

2003    Invasion of Iraq

2004    Rise in interest rates

2005    Gulf hurricanes

2006    North Korean testing of nuclear missiles

2007    The Chinese correction

2008    Beginning of the global financial crisis

2009    U.S. unemployment rate exceeds 10 percent

2010    BP oil spill

2011    The European PIGS debt crisis

2012    Falling off the U.S. fiscal cliff

2013    Boston Marathon bombing

2014    Ebola outbreak in West Africa

2015    The Paris attacks and U.S. mass shootings

2016    Donald Trump or Hillary Clinton

2017    North Korean nuclear testing

2018    Beginning of the US–China trade war

2019    Trump’s quid pro quo impeachment

2020    COVID-19

2021    Border crisis

2022    Russia’s invasion of Ukraine

If someone who turned 65 years old at the end of 2021 had invested $10,000 in the S&P 500 at the age of 25 on January 1, 1981, he or she would have $963,427, despite all the issues with markets, the economy and in the media. During that time, there were a lot of reasons to panic and to avoid investing. Yet those who did invest, and who ignored the negativity and stayed the course, fared well.

From March 1, 2012, to March 1, 2023, the Dow moved from 13,142 to 32,652 — a gain of 148 percent- despite all the issues.

Whether it’s a bank collapse, an international crisis or some other upheaval, you can weather the storm by being prepared and working with your financial advice team on the best strategies to take. Yes, the nature of crises will always vary, but one thing will never change: savvy investors can find opportunity within the upheavals.

We will guide you in taking a disciplined approach

There have always been — and most likely will always be — reasons not to invest and reasons to panic. Yet with a disciplined approach, you can not only manage these situations but benefit from them. While the events change, the ideal reactions are the same, as are the opportunities. We recognize that, although this is simple in theory, it is difficult in practice. That’s why we are here for you.

Our team has more than 250 years of combined experience with all kinds of market and economic conditions. We will guide you through whatever comes our way. Please reach out if you have questions or concerns or if we can otherwise be of service. There are potential pitfalls in building wealth today, yet there are also tremendous opportunities. Your vision is our priority, and your financial well-being is our passion.  We look forward to connecting with you.

 

Holding investments for the long term does not insure a profitable outcome. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.

Randy Carver, CRPC^®, CDFA^®, is the president and founder of Carver Financial Services, Inc., and is also a registered principal with Raymond James Financial Services, Inc. Carver Financial Services, Inc. was established in 1990 with the vision of making people’s lives better — clients, team and community. With this mission, Carver Financial Services has grown to be one of the largest independent financial services offices in the country, managing $2.2 billion in assets for clients globally, as of December 2022. Randy and his team work with individuals who are in financial transition as a result of divorce, retirement or the sale of a business. You may reach Randy directly at randy.carver@raymondjames.com in the office at (440) 974-0808.

 

 

 

 

 

 

 

As the April tax filing deadline looms, many investors are thinking about the taxes they will have to pay. In the end, though, it’s not what you make that’s important, but what you keep — net of fees, expenses and income tax. Investing in tax-exempt investments can reduce or eliminate your income tax and may provide you with higher net returns than taxable investments.

If you are in a higher tax bracket for federal and/or state tax, a lower tax-exempt yield can provide you with more net income than a higher taxable investment. For example, if you are in the 32 percent federal tax bracket, a 5 percent tax-exempt investment is equivalent to a 7.35 percent taxable investment. In general, the higher your tax bracket, the more you can benefit from tax-efficient investing.

Used properly, with the guidance of your advisory team, tax-exempt investments may provide you with significantly more net return. Managing your tax burden is one of the most valuable benefits you derive from working with our team.

Let’s look at five of the most common financial avenues that enable investors to take advantage of tax-exempt investing.

1. Municipal bonds

Municipal bonds, also known as munis, are debt instruments issued by states and local governments that allow investors to earn interest without having to pay income taxes on the proceeds. Investing in munis can be an effective way for individuals to reduce their overall income tax burden because income is not subject to tax.

Investors can buy the bonds themselves or can buy pooled investments such as mutual funds, unit trusts or exchange-traded funds (ETFs).

Some experts say 2023 looks to be a great year for munis, which is great news because 2022 was a tough year for many  fixed-income asset classes. Yields are now higher for muni bonds than at any other time in the past 15 years. While past performance doesn’t guarantee future results –  dating back to 1989, a down year in the municipal bond market has been followed by at least one year (or several) of positive returns.

2. 529 plans

Another type of tax-exempt investing is a 529 plan, which is a state-sponsored educational savings plan that offers tax benefits when the funds are used for qualified education expenses. Investments in these plans may also offer a deduction on your state tax return.

3. Health savings accounts

Health savings accounts, or HSAs, are the only type of account that offers triple tax benefits. Many medical insurance plans and policies with high deductibles make the insured eligible for contributions to HSAs.

Contributions up to an annual limit are tax-deductible when you make them and are excluded from your gross income when your employer makes them. The account can be invested, and the earnings compound tax-free in the account. Also, distributions from an HSA are tax-free when they are used to pay for or reimburse you for qualified medical expenses that aren’t reimbursed by other sources. Plus, if you incurred unreimbursed medical expenses in earlier years, the HSA can reimburse you for them in the current year, tax-free. Talk to your advisor about moving money from a taxable financial account to an HSA.

4. Employer-sponsored retirement plans

If you work for a company that offers a ROTH  401(k) retirement savings plan, consider maxing out the contributions you make to your account, if you aren’t already doing so, because you can make the contributions on a pretax basis.  Funds grow without tax and all earnings may be tax free if taken after the age of 59 ½.  

5. Long-term capital gains

Investment taxes, called capital gains, come in both long-term and short-term categories. A long-term capital gain is a tax on any investment you’ve held for at least one year, while short-term capital gains are those assessed on investments you’ve held for less than a year.

If you can reach the long-term threshold, your tax treatment will be significantly better. This is because short-term capital gains taxes are levied based on normal income tax brackets, while long-term capital gains have much lower rates of 0 percent, 10 percent, 15 percent, or 20 percent.

________

Overall, tax-exempt Investing can be an effective way for individuals to reduce their overall income tax burden. By investing in the products discussed here, you can maximize the amount of money you keep for yourself. These types of investments can also provide a stable stream of income with minimal risk.

Yes, “the tax man cometh,” as the old saying goes, but with the proper planning, you can pay “the tax man” less and keep more for yourself!

We Are Always Here for You

Investing in tax-exempt, or tax advantaged investments can be a great way to minimize your income tax liability and put more money in your pocket. However, it is important to understand the different types of investments available and the associated risks. Also, it’s important to remember that the tax benefits of these investments can vary depending on your particular tax situation. As such, it is always wise to consult with a qualified tax advisor before making any investment decisions.

Our team focuses on helping you achieve your vision in the most tax-efficient manner possible. While we can’t control markets, we often can control the tax implications of portfolio management.

Whether you would like a second opinion on what you are doing or need help designing a new financial plan, please reach out to us, without cost or obligation.

________

Randy Carver, CRPC^®, CDFA^®, is the president and founder of Carver Financial Services, Inc., and is also a registered principal with Raymond James Financial Services, Inc. Carver Financial Services, Inc. was established in 1990 with the vision of making people’s lives better — clients, team and community. With this mission, Carver Financial Services has grown to be one of the largest independent financial services offices in the country, managing $2.2 billion in assets for clients globally, as of December 2022. Randy and his team work with individuals who are in financial transition as a result of divorce, retirement or the sale of a business. You may reach Randy directly at randy.carver@raymondjames.com in the office at (440) 974-0808.

 

 

 

The New Year is always a good time to reflect on what’s important in life and what can make us happy. Carver Financial Services, Inc., was founded with the unique vision of making people’s lives better.

The old adage “Money can’t buy happiness” has been around for a long time. We might be inclined to believe this saying when we think about all the ultra-wealthy people who were chronically unhappy and destroyed their lives, craving and seeking something more meaningful.

But many people argue that money can buy happiness. So, which statement is true? As it turns out, there is some truth in both arguments. For example, a Harvard University Business School professor says financial stability helps people escape the everyday hassles of life and brings us more control.

The importance of relationships for happiness

Through decades of research, Harvard psychiatrist Dr. Robert Waldinger has been attempting to discover the factor that seems to make the biggest difference in people’s lives. Waldinger is a co-author of The Good Life: Lessons from the World’s Longest Scientific Study of Happiness.

He says relationships are the key to happiness. The stronger our relationships, the more likely we are to live happy, satisfying and overall healthier lives. In fact, the Harvard Study of Adult Development reveals that the strength of our connections with others can predict the health of both our bodies and our brains as we go through life.

There are many other factors that contribute to happiness as well, and what is important will vary from person to person. Here are a few elements that people often cite as being important for happiness, with strong relationships listed first:

1. Strong relationships: Having close, supportive relationships with friends and family can bring a sense of connection, belonging and purpose to our lives.
2. Personal growth and fulfillment: Pursuing activities that challenge us and allow us to learn and grow can bring a sense of accomplishment and fulfillment.
3. A sense of purpose: Having a sense of purpose — of meaning in life — can give us direction and motivation.
4. Financial stability: While money can’t buy happiness, having a stable financial foundation can remove a significant source of stress and allow us to focus on other areas of our lives.

How does wealth contribute to happiness?

People often view wealth as a means to an end, a way to provide for basic needs and wants. However, the role of money in our lives goes beyond just meeting our material needs. The old adage “Money can’t buy happiness” doesn’t hold up to the scrutiny of many recent research studies.

In fact, a 2021 Proceedings of the National Academy of Sciences (PNAS) study found that happiness actually increases as people’s income rises. The more money we make, the happier we become — or rather, we have the means to buy the things or experiences that make us happy. The study concluded that there is a direct connection between higher incomes, feeling better day-to-day and being more satisfied with life overall.

But one licensed mental health therapist, Billy Roberts, says money doesn’t directly contribute to our happiness. Instead, money can make us happy if it enables us to live by the values we’ve defined as important. Roberts says that for some people, value lies in power, while others find value in security or self-care. And people with different needs will likely have different financial needs. He concludes that a person’s salary should support a value-driven lifestyle.

Let’s look at some of the values people consider important and how they relate to financial well-being:

1. Financial stability and security: Having a stable financial foundation allows us to feel secure and confident in our ability to meet our needs and the needs of our loved ones. It can also give us the freedom to make choices and pursue opportunities that might not be available to us otherwise.
2. A sense of independence: Financial independence allows us to make our own decisions and not have to rely on others for financial support. It can also give us the freedom to pursue our passions and interests without the constraints of financial insecurity.
3. Enhanced overall well-being: Studies have shown that having a stable financial situation is linked to better mental and physical health. Financial stress can take a toll on our well-being, so having a healthy financial situation can help us feel more balanced and at ease. This is because higher income can provide access to a range of resources and opportunities that can promote good health, such as:

• Access to health care: Higher income can afford individuals and families access to quality healthcare services, including preventive care, diagnostic tests, and treatments.
• Nutritious food: Higher income can allow individuals and families to afford a varied and nutritious diet, which is important for maintaining good health.
• Stress reduction: Higher income can also reduce financial stress, which can have a positive effect on physical and mental health.
  • It’s important to note that while income can be a key factor in determining health outcomes, it is not the only factor. Other determinants of health include genetics, lifestyle and            environmental factors.

4. The ability to make a positive impact for others: Having financial resources can allow us to give back to our communities and make a positive difference in the world. Whether it’s through charitable donations, volunteering our time or supporting causes we care about, money can give us the means to make a positive impact, and that is a key to happiness for those who value doing so.

Keep your eyes on your Personal Vision

What brings you the most happiness? And how is that element of life related to money? What can you do to derive more happiness in 2023?

While money certainly isn’t everything, it can play a significant role in our lives and help us achieve our goals and aspirations. Ultimately, happiness is a complex and multifaceted emotion that depends on an individual’s values, goals and circumstances. It’s important to focus on what brings us joy and fulfillment and to make an effort to cultivate positive relationships and experiences in our lives.

At Carver Financial Services, we are focused on making lives better. We do this by financial and wealth planning and by providing experiences for our clients and community, ranging from travel to educational seminars. Most importantly, we use our proven Personal Vision Planning^® process to enable you to achieve your perfect vision of retirement. We are here to listen to what each client’s vision is for the future and then to help develop and implement a personalized plan for achieving that vision.

Please reach out, without cost or obligation, if we can answer questions or be of service as you develop your vision. You can learn about upcoming events on our website and also in some of our videos on timely and timeless topics that may be of interest to you.

We are here for you and look forward to helping you find what makes you happy and fulfilled in 2023 and beyond.

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Randy Carver, CRPC^®, CDFA^®, is the president and founder of Carver Financial Services, Inc., and is also a registered principal with Raymond James Financial Services, Inc. Carver Financial Services, Inc. was established in 1990 with the vision of making people’s lives better — clients, team and community. With this mission, Carver Financial Services has grown to be one of the largest independent financial services offices in the country, managing $2.2 billion in assets for clients globally, as of December 2022. Randy and his team work with individuals who are in financial transition as a result of divorce, retirement or the sale of a business. You may reach Randy directly at randy.carver@raymondjames.com in the office at (440) 974-0808.