NWP Monthly Digest | October 2019
Welcome to the ghastly month of October where another year brings developments to haunt investors. Similar to 2018, there are plenty of reasons to feel apprehensive while the stock market sits near all-time highs. Most concerning - the Denver Broncos are off to their worst start since 1999. That is enough to scare me but what is spooking you this year? Is it the recession in Argentina? Negative interest rates? The new season of Stranger Things? Or, possibly the official impeachment proceedings against the Tariff Man? October 8th will actually mark the 21st anniversary of the impeachment proceedings against Bill Clinton. Now are you afraid?
Well, don’t hide in the closet just yet. The last time a U.S. president was threatened with impeachment proceedings, the stock market actually rose ~37% from the date of the official proceedings up until Clinton’s last day in office (10/8/1998 - 01/20/2001). Another positive development - the S&P 500 has gained nearly 19% through the first three quarters of 2019. That is the best three quarter start to a calendar year since 1997.
We expect the stock market tug-of-war to continue in October as investors weigh out the positive and negative developments of the investment environment. We take a deeper dive into this tug-of-war in our latest blog post, “Who Would Win the Fight Between a Bull Market and a Bear Market Today?” Click on the link below to read the article.
Is There Still an Opportunity to Invest in Opportunity Zones?
After 2019, the tax incentives to invest in these “Opportunity Zone” projects wane. Opportunity Zones were created in the 2017 tax reform package with the goal of providing a new impetus for investors to support distressed communities through real estate investments. Like a 1031 exchange, those choosing to invest in these projects can defer capital gains from a previous investment. Unlike a 1031 exchange, those investors can also reduce the capital gains liability from that investment by 15% if they remain invested for seven years. Furthermore, investors do not have to pay any capital gains taxes for the Opportunity Zone investment if they hold the investment for ten years. But there is a problem - taxes would be due at the end of 2026. Those who do not invest in a project by 2019 will not meet the seven year requirement and their investments may lose the benefit of the full 15% reduction in capital gains taxes. Reach out to us if you have additional questions on this subject.
Noble Wealth Partners does not offer or sell Opportunity Zone investments nor does Noble Wealth Partners receive commission, referral fees, or any other form of compensation if clients decide to invest in these vehicles.
Our Noble Wealth Pro Tip for October
Were you born in the years 1949 to 1953? If so, are you married or have you been married for at least ten years? If yes, then you may be a candidate for filing a restricted application. This allows you to defer your benefits until age 70 while collecting on your spouse’s (or ex-spouse’s) benefits. If you filed within the past year, it is NOT too late for you. Please reach out to us and we are happy to help you make the correct choice when filing for your social security benefits. It doesn’t make sense to leave money on the table.