Thursday, May 13, 2021

What's Driving Oil Prices?

 


Oil prices are influenced by supply and demand, and 2020 was a great demonstration of this principle. With global and local shutdowns due to the spread of the coronavirus, there was less demand for products and services. While online shopping was up, foot traffic in stores languished and retailers – both local and nationwide – suffered from reduced consumerism.

With fewer customers, merchants needed less inventory. Wholesale orders dropped, as did the need to transport them from manufacturers to distributors to vendors. Reduced transportation led to less need for crude oil and gas. Thus, with decreased demand, gas prices dropped and stayed low.

Today, it’s a different story. Long-awaited vaccines have given retailers new hope for consumerism, so they are ordering increased inventory and deliveries are being made every day. Higher demand begets increased transportation, so oil prices are on the rise again. Lest we succumb to the impulse to complain about increased gas prices, remember that economic growth is a big contributor.1

Furthermore, for the first time since the pandemic began, more people are starting to leave the nest, taking vacations or planning trips for this summer. In April, the Energy Information Administration (EIA) announced that highway traffic is up 1% from a year ago and jet fuel demand jumped to 1.358 million barrels as vaccinated travelers are starting to take advantage of lower-cost airfares and hotel discounts. 2

As the economy recovers, we can expect higher inflation with many commonplace expenses. If you’ve reduced spending in the past year, note that your household budget may necessarily increase in kind – and not simply because you’re indulging in pent-up demand. If you need to make adjustments to your savings rate or review your portfolio to help defend against the effects of inflation, please give us a call. Now is a good time to review and reset your goals and allocations.

The oil industry is a little different from typical consumer goods. Because it takes time to mine for oil and refine it for consumer use, there is a lag time that can influence prices. For example, today’s new high demand will take a few months to affect crude oil production. The IEA predicts that new orders won’t be accurately reflected in global oil demand and supply until the second half of 2021. Once production is ramped up to meet rising demand, prices may begin to drop again.3

As of mid-April, the U.S. had fully vaccinated about 22% of the population. The United Kingdom was at about 11%, with France and Germany at only 6% vaccinated according to the Reuters vaccine tracker. Vaccine rollouts have been much slower and infections continue to surge in places like Europe, India and some emerging markets. Note that global oil producers take into consideration that other economies are not recovering as quickly as the U.S. While this may make them less inclined to ramp up oil production too quickly, the U.S. shale oil industry has a direct market to serve, so production is scheduled to increase by about 13,000 barrels per day.4

Also note that it’s not that easy to stay solvent during a year-long pandemic, even in the oil industry. In North America alone, bankruptcies among oil producers increased to the highest first-quarter level since 2016.5

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you! 

 

1 US Energy Information Administration. 2021. “Oil and petroleum products explained.” https://www.eia.gov/energyexplained/oil-and-petroleum-products/prices-and-outlook.php. Accessed April 15, 2021.

2 Phil Flynn. Futures Magazine. April 15, 2021. “An Increase In Travel Is Tightening Oil Supply In The U.S.” http://www.futuresmag.com/2021/04/15/increase-travel-tightening-oil-supply-us. Accessed April 15, 2021.

3 Gina Lee. Investing.com. April 15, 2021. “Oil Down as Investors Digest Latest Supply Forecasts, U.S. Crude Oil Supply Draw.” https://www.investing.com/news/commodities-news/oil-down-as-investors-digest-latest-supply-forecasts-us-crude-oil-supply-draw-2474995. Accessed April 15, 2021.

4 Aaron Sheldrick, Bozorgmehr Sharafedin and Stephanie Kelly. Reuters. April 12, 2021. “Oil rises on U.S. vaccine rollout, Middle East tension.” https://www.reuters.com/business/energy/oil-prices-climb-favourable-outlook-us-fuel-demand-2021-04-12/. Accessed April 15, 2021.

5 Liz Hampton. Reuters. April 15, 2021. “North American oil bankruptcies hit highest Q1 level since 2016.” https://www.reuters.com/business/energy/north-american-oil-bankruptcies-hit-highest-q1-level-since-2016-haynes-boone-2021-04-15/. Accessed April 15, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

 

 

 

Monday, May 10, 2021

Updates on FSAs and HSAs

 


A recent survey found that 40% of respondents with access to a health savings account (HSA) do not fully understand how they work. Basically, HSAs are paired with high-deductible health plans to help people save money for their plan’s high deductible, copayments and other qualified expenses.

However, the real value of an HSA lies in its tax-free advantages. Contributions are made tax free (reducing your current taxable income) and can be invested for tax-free growth in a variety of mutual funds, stocks and exchange-traded funds (ETFs). Additionally, HSA withdrawals are tax free as long as they are used to pay for eligible products and services.

In 2021, the contribution limit for a health savings account is $3,600 for individuals and $7,200 for families; anyone age 55 or older can make an additional $1,000 annual contribution.1

Throughout the past year, Congress expanded the eligible uses of these funds, further increasing their value and allowing you to purchase a wider range of personal and health-related products using tax-free income. If you have access to one of these accounts through work or purchase health insurance on the individual market, they are a good idea to include in a financial portfolio. If you’d like assistance determining how to invest your HSA savings to complement the rest of your portfolio, don’t hesitate to call us for advice.

The CARES Act, passed in spring 2020, expanded the types of products that can be paid for with HSA or employer-sponsored Flexible Spending Account (FSA) savings. Under the new regulations, these funds can be used to pay for over-the-counter medications, like ibuprofen and Claritin. Other products now eligible for purchase with HSA and FSA funds include:2

 

·         Facial cleansers, face wipes

·         Prescription acne medications and over-the-counter acne treatments

·         Sunscreen and medicated body lotions designed to alleviate certain skin conditions

·         Lip balms for sun protection and chapped lips

·         Hot and cold therapy packs, cooling headache pads

·         Heartburn medication

·         Allergy relief

·         Toothache relief, such as Orajel

·         Humidifiers, air purifiers and filters — with a letter of medical necessity (LMN) from a physician

·         Dietitian fees, with an LMN

·         Some mental health treatments and services

·         Prescription hormone replacement therapy

·         Birth control pills

·         Pregnancy tests

·         Fertility tests

·         Fertility treatments such as in vitro fertilization, intrauterine insemination, fertility medication, the temporary storage of eggs or sperm

·         Breast pumps, breastfeeding classes, absorbent breast pads, breast milk storage bags

·         Feminine care items, such as pads, tampons, cups, sponges

In February, the IRS published guidelines giving employers more flexibility to extend how long employees have to use their FSA funds. Normally these are “use it or lose it” by the end of the year, with a short grace period. However, due to job interruptions last year, new guidelines allow employers to extend those funding rules to carry over or extend the grace period for unused health and/or dependent care FSA funds for plan years 2020 and 2021 to the immediately following plan year. Note that the new rules permit employers to make these changes, but it’s up to the employer to decide what to do.3

FSA owners with more time and opportunities to spend their funds have many new approved items for which they can use that money – even for gift ideas (these expenses are approved for an HSA as well):4

 

·         Ancestry kits (a fun holiday gift for family members)

·         Baby monitors and potty-training undies (baby shower gift)

·         Birth classes and medically certified doulas

·         Prescription sunglasses (for a winter ski trip)

·         Nicotine gum, patches, lozenges, inhalers, nasal sprays (New Year’s resolution to stop smoking)

·         Moisturizers with SPF protection (such as expensive anti-aging facial lotions)


The Personal Health Investment Today (PHIT) Act is a bipartisan bill introduced in March that, if passed, would permit the use of pre-tax FSA and HSA funds to pay for healthy living products and activities, such as gym memberships, fitness equipment and sports-league fees.5

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you! 

 

1 Brian O’Connell. Omaha World-Herald. March 4, 2021. “Saving For Medical Expenses With An HSA.” https://omaha.com/business/investment/saving-for-medical-expenses-with-an-hsa/article_3412a1e3-63be-51f0-8ebe-f6c49b3ddb2c.html. Accessed March 23, 2021.

2 Regan Olsson. BannerHealth. July 19, 2020. “7 Things Covered by Your FSA That Might Surprise You.” https://www.bannerhealth.com/healthcareblog/advise-me/7-things-covered-by-your-fsa-that-might-surprise-you. Accessed March 23, 2021.

3 JD Supra. Feb. 22, 2021. “IRS Notice 2021-15 Provides Clarity Regarding FSA Relief Available Under Consolidated Appropriations Act Benefits Law Update.” https://www.jdsupra.com/legalnews/irs-notice-2021-15-provides-clarity-3663572/. Accessed March 23, 2021.

4 Megan Leonhardt. CNBC. Dec. 15, 2020. “15 surprising things you can buy with your leftover FSA dollars.” https://www.cnbc.com/2020/12/15/15-surprising-things-you-can-buy-with-your-leftover-fsa-dollars-.html. Accessed March 23, 2021.

5 Jody Heemstra. DRG News. March 19, 2021. “Thune, Murphy Reintroduce Bill to Encourage Healthy Living.” https://drgnews.com/2021/03/19/thune-murphy-reintroduce-bill-to-encourage-healthy-living/. Accessed March 23, 2021.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

 

 

 

Thursday, May 6, 2021

New Status on Pension Plans

 


Financial professionals and economists have been talking about the “graying of America” and the retirement crisis for at least a couple of decades. Now, it seems, things have reached a tipping point.

Even labor union workers, largely beneficiaries of rich benefits and pension plans, have been hit hard. Throughout the past century, unions set up multiple-employer pension plans so that unionized workers in the trucking, trade, construction, ironworking, carpentry and other industries could change employers throughout their career while staying with the same union and continue accruing pension benefits from job to job.1 Despite that effort, more than 1,400 multiemployer pension plans covering about 11 million U.S. workers have fallen into a financial hole.


For example, a worker who retired in 2009 with 37 years paid into his pension fund was due $4,265 per month for life. However, in 2015 his pension benefit was slashed to $2,217 per month due to underfunding.2


This problem doesn’t just affect pensioners, it affects the nation’s overall economy. According to the National Institute of Retirement Security, each $1 spent on pension benefits supports $2.19 in economic output. In some coal-mining areas, entire towns are supported by union pensioners. In Detroit, nearly a third of income comes from pensions, union retiree health, Medicare and Social Security. If pension plans fail, communities throughout the heartland, including Ohio, Kansas, Pennsylvania, Michigan and Indiana, will suffer immeasurably.3


Union pensions are not the only plans under financial pressure. According to the 2020 Social Security Trustee report, the Social Security retirement trust fund was scheduled to run out of money by 2034. But that estimate was before the pandemic, when unemployment and suspended FICA payroll taxes significantly reduced Social Security revenues while at the same time millions of people retired early and began tapping their benefits. The new trustee report, due in a few months, will likely update that depletion date to 2032 or sooner. Without changes, Social Security benefits soon will be funded solely by current payroll taxes, which would reduce benefits by as much as a quarter of previous estimates.4


It may be a good time to review your individual retirement plan to shore up any gaps that may be affected by reduced pension and government benefits. Feel free to contact us to discuss your situation and explore tax-efficient ways to provide more financial confidence to your retirement plans.

The recent $1.9 trillion stimulus bill took a first step to help stabilize pension plans. It authorized funding by the Pension Benefit Guaranty Corporation (PBGC) for eligible multiemployer plans to enable them to pay benefits at plan levels and remain solvent. The funding is being paid out from general revenues of the U.S. Treasury.5

 

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you! 


 

1 Martha C. White. NBC News. Feb. 8, 2021. “Stimulus checks that don’t get used right away are still 1 Chris Farrell. Marketwatch. March 15, 2021. “The new stimulus bill will help shore up some shaky pension plans.” https://www.marketwatch.com/story/the-new-stimulus-bill-will-help-shore-up-some-shaky-pension-plans-11615586775?mod=home-page. Accessed March 22, 2021.

2 Teresa Ghilarducci. Forbes. March 15, 2021. “What Is The Pension Provision In The Stimulus Package? An Explainer.” https://www.forbes.com/sites/teresaghilarducci/2021/03/15/what-is-the-pension-provision-in-the-stimulus-package-an-explainer/?sh=7fdbc4c257d1. Accessed March 22, 2021.

3 Ibid.

4 Bob Carlson. Forbes. Feb. 22, 2021. “Changes Must Come To Social Security.” https://www.forbes.com/sites/bobcarlson/2021/02/22/changes-must-come-to-social-security/?sh=44501abc15e4. Accessed March 22, 2021.

5 Pension Benefit Guaranty Corporation. March 12, 2021. “American Rescue Plan Act of 2021.” https://www.pbgc.gov/american-rescue-plan-act-of-2021. Accessed March 22, 2021.

6 Jory Heckman. Federal News Network. Feb. 24, 2021. “USPS 10-year plan looks to redefine ‘unachievable’ service standards.” https://federalnewsnetwork.com/agency-oversight/2021/02/usps-10-year-plan-looks-to-redefine-unachievable-service-standards/. Accessed March 22, 2021.

7 Govtrack. Feb. 2, 2021. “H.R. 695: USPS Fairness Act.” https://www.govtrack.us/congress/bills/117/hr695. Accessed March 22, 2021.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

 

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

Monday, April 26, 2021

What the Stimulus Check Could Mean for Investors

 


Millions of Americans have embraced the new relief money resulting from the $1.9 trillion America Rescue Plan. They’ve been able to pay for utilities and put food on the table while looking for employment. Those who maintained their jobs throughout the pandemic have embraced the payout as well, but for different reasons. For them, it’s not about survival, it’s about ways to spend that lovely windfall.

 

It’s important to recognize that the new stimulus bill, passed at the same time that vaccine distribution became widespread, is not just about helping households in financial distress. It’s also about jumpstarting the economy right about the time people can get back out and find work. That’s why it’s called a stimulus bill — to stimulate spending. Households that need the money can spend it on consumer staples or pay down debt.1

 

If you’re looking to invest your stimulus money in an insurance or financial product, we can help. Contact us for a comprehensive portfolio review and advice on the best way to position your assets for your financial goals.

 

Regardless of what goods and services are purchased, the US economy will benefit from households spending. The more consumer spending, the faster the economy can recover and grow. The more it grows, the more demand for consumer goods will increase jobs, and jobs create more spenders and taxpayers. Increased sales and income taxes put more money in government coffers, which can then be used to pay down the debt acquired by the three stimulus bills passed during the pandemic.

 

Sectors and companies standing to benefit from the stimulus may be of particular interest to investors as we weave our way out of this health and economic crisis. Analysts at UBS Global Wealth Management expect capital to rotate out of tech and growth stocks and into cyclical sectors that will benefit from higher growth and a steeper yield curve, including financials, industrials, and energy stocks. Consumer discretionary stocks poised for growth include companies in travel, leisure and hospitality sectors, as well as Amazon. Unemployed workers will likely use enhanced jobless benefits to pay for rent, which benefits residential REITS.3

 

Even in the wake of a pandemic, there are always winners. For example, vaccine maker Moderna has been one of the highest performing stocks throughout the last year and a half. And now, the stimulus bill provides an additional $160 billion for vaccine development and distribution, which is a boon for pharmaceuticals.

 

Moving forward, investment analysts see underpriced “value stocks” gaining more momentum than growth stocks. While tech company stocks have soared during the pandemic, a virus-free country bodes well for airlines, hotel chains, movie theatres and other industries shut out by social distancing restrictions.4

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you! 


1 Martha C. White. NBC News. Feb. 8, 2021. “Stimulus checks that don’t get used right away are still ‘economic rocket fuel,’ experts say.” https://www.nbcnews.com/business/economy/stimulus-checks-still-boost-economy-even-if-money-goes-savings-n1257073. Accessed March 15, 2021.

2 Palash Ghosh. Forbes. March 15, 2021. “Amazon, Six Flags, Square: Here Are The Stocks Ready To Rise Thanks To New Stimulus Checks.” https://www.forbes.com/sites/palashghosh/2021/03/15/amazon-six-flags-square-here-are-the-stocks-ready-to-rise-thanks-to-new-stimulus-checks/?sh=2ebd86071a29. Accessed March 15, 2021.

3 John Hyatt. Nasdaq. March 12, 2021. “What Biden’s $1.9T Stimulus Means for Investors.” https://www.nasdaq.com/articles/what-bidens-%241.9t-stimulus-means-for-investors-2021-03-12. Accessed March 15, 2021.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 


Tuesday, April 20, 2021

Tax Topic: Qualified Business Income Deduction

 


One of the provisions included in the Tax Cuts and Jobs Act of 2017 was the Qualified Business Income (QBI) deduction. It is designed as a tax break for small businesses or self-employed individuals and is comparable to the enhanced tax breaks legislated for larger companies. However, while the corporate tax changes are made permanent, the QBI is scheduled to end in 2025 – along with a host of other individual tax-return breaks.

 

The QBI applies to revenues that are “passed through the business,” so the owner actually pays taxes on that money on his or her individual tax return at their individual tax rate. Since they do not benefit from the substantially reduced corporate tax rate, S Corp or sole proprietors can claim up to 20% of their “qualified business income” as a deduction.1

 

The IRS defines QBI as income, gains, deductions and losses from a qualified trade or business – including income from partnerships, S corporations and sole proprietorships – minus business deductions such as half the self-employment tax, self-employed health insurance and qualified retirement plan contributions.2

 

To qualify, the taxpayer’s income must be at or below $163,300 for single filers or $326,600 for married filers ($164,900 / $329,800 in 2021). If income is above those thresholds, the taxpayer may still qualify for the QBI, but it gets tricky, particularly if he or she works in a specified service trade or business. This generally includes high-income professions such as a doctor or a lawyer.3 It’s a good idea to consult with a financial professional to help you understand if you qualify for this deduction.

 

A taxpayer with several different entrepreneurial ventures can combine those multiple sources of income to calculate his total QBI. The higher the qualified income, the higher the deduction (as long as it remains below the threshold for the individual’s filing status). When income looks to be higher than the limit, these tactics can be used to help reduce it to qualify for the QBI deduction:4

 

Be aware that a taxpayer who claims business losses may still qualify for the QBI but, here too, it gets very complicated.5 It’s important to work with a qualified tax professional who is familiar with the ins and outs of this deduction.

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you! 

 

1 Stephen Fishman. Nolo. 2021. “The 20% Pass-Through Tax Deduction for Business Owners.” https://www.nolo.com/legal-encyclopedia/the-new-pass-through-tax-deduction.html. Accessed March 9, 2021.

2 IRS. April 8, 2019. “Facts About the Qualified Business Income Deduction.” https://www.irs.gov/newsroom/facts-about-the-qualified-business-income-deduction. Accessed March 9, 2021.

3 Andrea Coombes and Tina Orem. Nerdwallet. Nov. 13, 2020. “Qualified Business Income Deduction (QBI): What It Is & Who Qualifies.” https://www.nerdwallet.com/blog/taxes/pass-through-income-tax-deduction/. Accessed March 9, 2021.

4 Paul Chaney. Small Business Trends. March 3, 2021. “What’s the Qualified Business Income Deduction and Can You Claim It?” https://smallbiztrends.com/2020/08/qualified-business-income-deduction.html. Accessed March 9, 2021.

5 Michael T. Odom. The Tax Adviser. Dec. 1, 2020. “QBI deduction: Interaction with various Code provisions.” https://www.thetaxadviser.com/issues/2020/dec/qbi-deduction-interaction-code-provisions.html. Accessed March 9, 2021.

 

Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies