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119 Old State Rd, Ellisville, MO 63021 CapitalAdvisoryGrp.com
FEB 2018
GET IN TAX SHAPE PAVE YOUR WAY TO EFFICIENCY
IFTAX SEASON WAS A RELAY RACE,WE’D BE INTHE
into and don’t pay taxes on right away. Instead, you’ll pay taxes on this account when you withdraw the money. While it may sound nice to not pay taxes right now, you could end up paying more during retirement when tax-deferred accounts are your driving strategy. We’ll talk more about that after we review the last tier. TAX EFFICIENT This tier can be a sweet spot when it comes to your accounts. One example of a tax-efficient account is the Roth IRA. In this account, you’ll pay your taxes up front when you put money into it. When you withdraw money from the Roth IRA, you will have already paid taxes on it. When you look at these three tiers, you want to see three healthy categories for your taxes. Like a runner, you don’t want to overdevelop your quads and neglect your hamstrings. For example, if you pile money into your 401(k) right now, you might save on taxes for this year, but when it comes time for retirement, every nickel that you spend is taxable. If you’re in a higher tax bracket than you were 20 years ago, you might end up paying higher taxes.That doesn’t sound very efficient, does it?
BEGINNING HEAT RIGHT NOW. While we are still in the planning stage, we are also warming up for the next heat, the preparation.That’s when you’ll finish up your planning and turn the baton to us so we can reach the finish line in April. With any race, you can’t just show up the day of and think you’ll be ready to go. You have to train year-round with daily exercises.Think of tax planning the same way. Look at the full season of taxes to determine your training schedule. If you haven’t thought about what type of tax shape you’re in, it’s time to get to it. When it comes to taxes, you can think of your accounts as being divided into three tiers.This perspective might shift your training schedule. TAXABLE This first tier is made up of your taxable accounts.This is everything that you’ll pay current taxes on.This might include your CD and brokerage accounts. TAX DEFERRED Tax-deferred accounts are accounts like your IRA that you will put money
No surprise here — this goes back to tax planning. As you think about your tiers, you may be able to make changes that are customized to your situation. Depending on your tax brackets, it could be helpful to convert your 401(k) or IRA to a Roth account, making it so you’re contributing to your tax-efficient tier. Whether this is tax efficient for you will depend on your current brackets and an assessment of your retirement goals. Working with you, our team at Capital Advisory Group can assess options and help you get into better tax shape. We are here to help. If tax season is a relay, financial planning is a marathon, and we’re in it for the long run. See you at the finish line.
John and Jeff Zufall
(636) 394-5524 1
Published by The Newsletter Pro • www.TheNewsletterPro.com
We’re lucky to have a strong team here at Capital Advisory Group, and each of us plays an essential role. One of our MVPs is Laurie, our operations manager and behind-the-scenes pro. As the operations manager for Capital Advisory Group, I’m responsible for providing support to our team and streamlining processes. Since joining the team in 2005, I’ve watched us grow and adapt with the times. I’ve been interested in finance since I was in college, and I’ve been a numbers person for much longer. When I was a kid, I’d watch my dad calculate his records, and it helped me understand the important role numbers play in every aspect of life. After graduating from college with a finance degree, I began working in the financial sector. When I found Capital Advisory Group, it immediately felt like a good fit, and it’s turned out to be the place for me. I was born and raised here in St. Louis and appreciate having my family close by — and now my husband’s family, too. For Christmas, we “house-hopped” so that we could spend time with everyone. I have little kids, so outside of work, most of my time is spent with them, going from one activity to the next. My son, Colin, loves anything to do with sports. Baseball is his current favorite; he’s usually running from base to base outside or tossing a ball. My daughter, Kasey, is 3, so she’s still a bit young for sports, but I’m sure she’ll find her own favorites soon. As a family, we like to go boating, so if it’s summer, you’ll probably find us at the lake. We love the outdoors and all that St. Louis has to offer. I look forward to seeing you at Capital Advisory Group. If you have any questions, don’t hesitate to reach out! OUR BEHIND- THE-SCENES SUPPORT
What happens when an internet personality complains about your company? If you’re Amazon, you make sure the next time they talk about you, they’re singing your praises. ScreenJunkies News is a popular YouTube channel dedicated to media and pop culture. In early November of 2017, the channel streamed a panel discussion that focused on comments from Amazon’s CEO, Jeff Bezos, who said he wanted to pursue video content that would appeal to a broader audience. One of the panelists, Dan Murrell, quipped that he’d rather Bezos make sure the DVD racks he ordered from Amazon arrived on time. This off-the-cuff complaint garnered laughter from the other panelists.They chimed in with their own comments on Amazon’s delivery practices, and one panelist brought up third-party couriers’ inability to find Murrell’s leasing office. When the panel moved on to other topics, Murrell’s Amazon comments were seemingly forgotten — that is, until two days later when ScreenJunkies News streamed another video, during which Murrell shared his experience with a customer service representative who reached out to him. After seeing the first video, the representative said they wanted to rectify the situation.They personally checked that Murrell’s most recent order, a bookshelf, was scheduled to be delivered on time, and they gave Murrell the opportunity to air his grievances about third-party couriers. During the panel discussion, Murrell mentioned that he’d never seen the movie “Lawrence of Arabia,” and the representative told him that Amazon had sent him a Blu-ray copy of the film, free of change. Also, $100 was added to Murrell’s Amazon account. This response may seem over the top for a YouTube joke, but Amazon’s model works. Last year, Jeff Bezos became the richest person in the world, surpassing Bill Gates.The key to Amazon’s success? Don’t wait for complaints. If a package is late, Amazon sends the client a new delivery date. Amazon’s Kindle Fire tablet includes a Mayday Button, which encourages customers to contact around-the-clock support the moment they feel frustrated. And, by reaching out after seeing Murrell’s complaints, Amazon is no longer the company that can’t deliver a DVD rack on time. Now, to Murrell, the other panelists, and the channel’s 1.5 million subscribers, Amazon is the company that makes things right. Who wouldn’t want to do business with a company that takes care of them? WHAT YOU CAN LEARN FROM THE KING OF CUSTOMER SERVICE
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CapitalAdvisoryGrp.com
YOUR ANNUAL CHECKUP
A n annual checkup might bring to mind your next doctor’s visit, an appointment that is crucial to your physical health. It’s your opportunity to get a professional evaluation and address concerns you’ve been noticing. Obviously, you won’t ask your physician about your 401(k). So, what about your financial health? Do you know who to go to for that checkup? And have you scheduled it? If it’s been awhile since your last financial checkup, and especially if you’ve experienced any lifestyle changes in the last year, it’s time to schedule it. Changes in your employment, investments, purchases, and family can all impact your finances, both in the short- term and in your future. A year might
Ingredients Directions • 2 cups frozen tater tots, defrosted • 1 ounce sharp cheddar, cut into 1/4-inch squares • 4 slices bacon, quartered • 1/4 cup brown sugar • 1 tablespoon chopped parsley 1. Heat oven to 400 F. Line a baking sheet with parchment paper and set aside. 2. Press a cheese square into each tot, then wrap with a piece of bacon. Dredge each tot in brown sugar. Sure, your showoff pal can wrap a tater tot with a piece of bacon and call it “The Daniel,” but you can take it a step further. Prepare a couple batches of these savory snacks for your Super Bowl party or the next family get-together. Snag a few for yourself before they disappear! not seem like a long time to go without assessing your finances, but a lot can happen in 365 days. If you set a budget last year, that’s a good place to start. How well did you stick to it? Are there areas that show over-spending? Does it still make sense? Looking over your budget might make you aware of trouble spots, and those are concerns you can bring in when you meet with your advisor. When you meet with your financial advisor, you’ll review changes and assess how they’ll affect your plans. Afterward, they can help you find appropriate alternatives. It might be time to make more contributions to one account, as each year you move closer to retirement. A financial checkup, much like your checkup with your doctor, can serve as a
preventive appointment. Like your doctor reviews your vitals to look for any areas of concern, your advisor will look for changes in spending and income to help you find areas that you might need to be addressed.
Take initiative in your financial well- being. Don’t delay your appointment any longer. Call Capital Advisory Group today and schedule your 2018 financial checkup.
TAKE A BREAK BACON-WRAPPED TATER TOT BOMBS
(Recipe inspired by ThisGrandmaIsFun.com)
3. Place tots seam side down on baking sheet. Bake for 20–25 minutes, using metal tongs to turn halfway through. 4. Garnish with parsley, if desired, and serve immediately.
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Don’t Fear the Taxman
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What Makes Amazon the King of Customer Service?
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Get to Know Laurie
page 3
Time for a Financial Checkup?
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Not Sure What to Bring to the Super Bowl Party?
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Effort Counts Twice
DISCOVERING TRUE ‘GRIT’
Perhaps most instructive is Duckworth’s equation (she was a math teacher, after all): TALENT x EFFORT = SKILL SKILL x EFFORT = ACHIEVEMENT “Effort counts twice” could be the battle cry of grit. Gritty people are willing to put in the extra effort to achieve their goals, and that’s what helps them reach their goals if they don’t have innate talent. While this provides a strong case that those born with grit will succeed, grit doesn’t factor luck and opportunity into the equation, something that Duckworth is transparent about in her book. She says those who aren’t born with grit can develop it in four simple steps. First, identify an interest that can blossom into a passion. Second, practice that passion, a lot .Third, develop the belief that your passion has purpose.While it’s not an overnight transformation, these guidelines
If you’ve ever been told you won’t succeed because you lack talent, bring a copy of “Grit” to your next meeting. While teaching high school math, author Angela Duckworth noticed some of her highest-achieving students weren’t the ones with the highest IQs, while some of her “smartest” students weren’t doing all that well in class. “Why?” she wondered. She followed her curiosity to Penn State’s psychology program.There, she studied several demographics, including cadets at West Point, young teachers, and sales representatives. After numerous psychological studies, Duckworth discovered that “grit”was the common denominator in successful people. Duckworth defines grit as “passion and perseverance for very long-term goals.” People who display grit don’t start a project and abandon it a month later.They devote themselves to an overarching goal that drives everything they do. She explained that someone who practices grit goes through life like a marathon, not a sprint.
can at least give us hope, which is the fourth step: Hold on to hope that you can succeed. Our biggest takeaway from “Grit”? Look at failures as milestones on the journey to success. Getting gritty means failing and learning from it. Any of us can get gritty if we’re willing to put in a little elbow grease.
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WHO ELSE WANTS TO TAKE ADVANTAGE OF THE NEW TAX LAWS … ?
iTaxes Version 3.8 Billion In November 2016, the Syfy Channel debuted a new show called “Incorporated” about a dystopian future where corporations, not governments, rule the world. If that nightmare ever comes true, we all know which real- world corporation will rule them all. It’s Apple! The most valuable corporation in the world just took the shrink- wrap off its $5 billion ring-shaped headquarters in Cupertino, California, and is on the verge of becoming the world’s first trillion-dollar company. Odds are good that you’ve got an iDevice of some sort in your home, office, or pocket. Apple’s design geniuses combine addictively appealing features with technology that keeps users hooked like heroin addicts. But what you may not know is how Apple’s financial geniuses use proactive tax planning to make their company even more valuable. And now, the recently signed Tax Cuts and Jobs Act has inspired them to act again. Apple has scattered their manufacturing operations throughout the world to take advantage of lower costs overseas. (You think your 10-year-old’s science fair project is special? Big deal —
10-year-olds in China are building iPhones!) This has prompted various entertaining debates over the ethics and politics of offshoring, which we won’t presume to touch here. Apple hasn’t just offshored manufacturing operations to cut manufacturing costs. Like many corporations, they’ve also offshored their profits to take advantage of tax rates that are lower than the traditional 35% rate.This involves strategies with names like the “Double Irish with a Dutch Sandwich” strategy, which sounds like something you’d see figure skaters attempting at the upcoming Winter Olympics. Hoarding cash before the IRS gets to grab 35% of it doesn’t mean stuffing it under some sort of supersized Irish mattress.The parent company borrows their own subsidiary’s cash, deducts 35% of the interest they pay for it here in the U.S., and pays tax on that interest at just 12.5% in Ireland, shifting even more money out of IRS reach. Now the Trump Tax Cuts and Jobs Act has cut the rate on Apple’s iProfits to just 21%. It even includes a bonus “incentive” for companies with cash overseas, letting them pay a one-
time 15.5% rate to load those bales of cash on a plane and bring them home. So Apple is repatriating $252 billion, and writing the IRS a $38 billion check — enough to finance the entire government of Missouri for a year, with enough left over to pay for every city and county government, too. But that’s still $43 billion less than paying 35% on the full amount. And what will Apple do with their iSavings? Throw a party, of course! They’ve announced plans to hire 20,000 new employees, build a second domestic headquarters campus, and boost R&D to diversify away from the iPhone.They’ll also use billions more for dividends (which puts cash in shareholders’ hands) and share buybacks (which also rewards them by pushing up prices). We realize you don’t have $252 billion to plan for. But that doesn’t mean you can’t profit from good tax planning, too. So give us a call when you’re ready to take full advantage of the new tax law. And please don’t keep us a secret — share this with people you know who could benefit from our expertise. Let’s see how much additional iCash we can put in your pocket!
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