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New Year and a New Tax Bill

What I love most about my role as a trusted advisor and wealth strategist is being able to help my clients navigate their way to optimum financial health. That means understanding the latest laws and their impact as well as structuring new plans for protecting the integrity of their investments and financial decisions along the way.

Effective January 1st, 2018, here are a few highlights of the new tax bill:

  1. The bill keeps deductions for charitable contributions, property taxes, mortgage interest, and retirement savings. It limits the deduction on mortgage interest to the first $750,000 of the loan.
  2. State Taxpayers can deduct up to $10,000 in state and local taxes. They must choose between property taxes and income or state taxes.
  3. Those paying alimony will lose their deduction, but those receiving alimony will no longer be taxed on the income. This change begins in 2019 for divorces signed in 2018.
  4. Interest on home equity lines of credit can no longer be deducted. Current mortgage-holders aren’t affected.
  5. It allows taxpayers to deduct medical expenses that are 7.5 percent or more of income.
  6. It doubles the standard deduction for everyone. A single filer’s deduction increases from $6,350 to $12,000. The deduction for Married and Joint Filers increases from $12,700 to $24,000.
  7. The bill repeals the Obamacare tax on those without health insurance.
  8. It eliminates personal exemptions. Taxpayers currently subtract $4,150 from income for each person claimed.
  9. The bill doubles the estate tax exemption to $11.2 million for singles and $22.4 million for couples.
  10. It keeps the Alternative Minimum Tax. It increases the exemption from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint.
  11. It lowers the maximum corporate tax rate from 35 percent to 21 percent. Clients who are sole proprietors (Schedule C) may consider forming an entity in 2018. See below for information on how Laguna Legal can help you set up your new Corporation or LLC.

Got questions? I’d welcome the opportunity to discuss the latest tax bill changes and its potential impact on your comprehensive financial plan with you. Let’s talk strategy… email

By Bart Zandbergen, CFP®

Note: This is a special guest blog post I wrote for William Strachan Family Law recently. William Strachan is a Certified Family Law Specialist by theCalifornia State Board of Legal Specialization withover 28 years practicing family law. His practice is located in Huntington Beach and you can find his website at

Navigating the rough road of divorce can be a strain, physically, emotionally and financially. From a financial standpoint, it can be especially stressful if you were not involved in the financial decision-making during your marriage or didn’t have a good understanding of your financial situation as a couple.

If your divorce is complete, it’s time to start rebuilding your financial house piece by piece. For some, this can be a scary situation, but you can be confident in your ability do it, albeit with some professional help!

Let’s address how you might go about getting your financial fresh start after divorce.

First, you’ll need to an inventory of your current financial situation. Detail out your assets, income and expenses, and create a budget. A budget is essential when you start life on your own, especially if you were not the spouse managing the money when you were married.

Also in this step, I would encourage you to write out your financial goals and future plans. Do you have any big expenditures coming up in the near future? When do you want to retire? What would you like your retirement to look like? These are all questions that are good to think about as you start to address your financial situation and plan for the future.

Next, find a financial planner or wealth advisor to help you map out a financial plan; I recommend a Certified Financial Planner™ (CFP®). CFPs have completed extensive training as well as met experience requirements and are held to rigorous ethical standards. They understand the complexities of the changing financial climate and know how to make recommendations in your best interest.

This step is critically important if you have received a lump sum of money from your divorce settlement. Before spending any of that, I highly recommend you find a trusted CFP® to help you create a plan for your money.

A CFP® will also help you create a path to retirement.Many people find themselves having to reset their retirement date or modify their retirement plan after divorce. A CFP® will help you address important retirement issues from your divorce, such as:

  • Whether you’re eligible for spousal social security benefits, and if so, when you can file for them.
  • If you have a qualified domestic relations order (QDRO), how that works and what it means to you.
  • How to manage any joint assets you continue to hold with your ex after divorce.

There are some additional topics you will want to discuss with your financial advisor as well:

  • If you have debt, you will need a plan to pay it off and bring it zero as soon as possible. If you are still investing and are carrying debt as well, your advisor might recommend putting your investing on hold until your debt is payed off. Make sure your advisor knows about your total amount of debt.
  • A plan to rebuild your savings, if they have been depleted. A good rule of thumb is to have 3-6 months’ worth of expenses in an easily accessible savings account.
  • Your tax situation
  • The best types of funds and ETFs for your retirement portfolio moving forward
  • An investment plan tailored for your specific personal situation

I know this can all sound daunting and overwhelming if you were not involved in managing your investments and finances during your marriage. One of the best pieces of advice I can give is to start the process immediately after divorce. I have seen many individuals make the mistake of burying their head in the sand because it hurts too much to think about, or they wait until the alimony and child support run out and reality hits.

The first few years after your divorce are transitional ones, so gather your strength and address your financial situation head-on. Though difficult, you will find yourself and your family on a better path to the future, full of excitement and hopes and dreams.

25 Years in Review: The Evolution of My Investing Philosophy

The Evolution of My Investing Philosophy

When I first started out as a financial advisor back in 1992, times were different. First of all, it was a really bad fashion decade…think baggy suits. Haha! Anyway, I digress.

The Dow Jones was at 3233; we were well off the lows of the September 1990 correction of 14% and of course the 33% correction of October 1987. Little did I know at the time that we would enjoy one of the best bull markets of history, rising to 10876 (+256%) by November 1999.

Allocation models were simple; for the most part, the model was 80% Equities/20% Fixed Income. If we were not earning 20% per year there was something wrong…

Flash forward to today, and though client’s goals, objectives, and risk tolerance drive the allocation, our moderate growth allocation looks pretty similar to this:

  • 35% Global Equities
  • 30% Real Assets
    • Real Estate
    • Natural Resources
    • Global Infrastructure
    • Commodities
  • 20% Fixed Income
  • 15% Alternative Investments
    • Reinsurance
    • Life Settlements
    • Managed Futures
    • Absolute Return Funds

When I create retirement strategies for my clients, there are four factors I focus on:

  1. Client’s retirement goals: What age they would like to retire at or what year?
  2. Client’s risk profile: For example, do they lose sleep over the thought of loss of principal?
  3. Client’s current lifestyle vs. desired retirement lifestyle: Will there be more travel, hobbies (like golf), etc.? The ‘old rule’ was to use 80% of pre-retirement expenses, but today people are much more active and traveling so we are actually calculating with 100-110% of pre-retirement expenses.
  4. Current economics:For the last 35 years, interest rates have been falling, causing Bond values to increase, thereby making Bonds a natural choice for a majority of retirees’ portfolios. Today, interest rates are at all-time lows but WILL eventually rise, causing value of bonds to decrease. That has caused us wealth advisors to seek other areas of income. This is where ‘Alternative Investments’and ‘Real Assets’ come into play (as per above).

Other factors have changed retirement overall, which have, in turn, affected my investing philosophy:

  • Decrease in pensions—the reliance on company funded pensions are a thing of the past. This requires me as a wealth advisor to advise clients to practice one of the most basic principles of wealth accumulation…”Pay yourself first”. Whenever possible, use Defined Contribution Plans (401k, SIMPLE IRA, SEP-IRA) to save for your future with tax deferred, tax deductible dollars.
  • People are retiring later in life—but also living longer. The net/net of it is that we have longer retirements to plan for. Years in retirement, expenses, and inflation are all key factors.
  • Today’s economy – the economy is a big factor in what drives our investment models. The percentage that we allocate to Global Equities, Real Assets, Fixed Income and Alternatives is driven in large part by the current economy as well as what we see for the potential future economy.
  • Increasing health care costs – Health care costs expensed during retirement are one of the biggest factors in retirement planning; rising health care costs can have a big impact on that.

One thing that doesn’t change as the years go by is my approach. Our job as wealth advisors is to evaluate the circumstances, trust our models, and stick to the course. I make sure to keep an investment strategy in front of my clients and make sure accounts are properly allocated and rebalanced as needed.

Make your investments great again

Although every day is a new opportunity to begin again, there is something about the start of a fresh season that empowers people to take action. In addition to ushering in 2017, we are also welcoming a new President into the White House to lead our nation.

While rising interest rates are eminent and a 7 year bull stock market run are both cause for concern, the President has made promises that could strengthen our economy, thereby maintaining the stock market run for a bit longer than anticipated.

Throughout this season of change, the key to positioning oneself for the ebb and flow is to diversify and include alternative investments such as non-stock, non-bond assets. While it’s impossible to know what the future will hold, implementing a forward thinking strategy that works towards your individual goals will pay off in dividends.

5 Wealth Building Recommendations

Having been a CFP for 25 years, I am often asked what my top tips are for making smart investments. Here are my top 5 recommendations that everyone should consider when making strategic decisions to their wealth building strategy:

  1. Avoid Self Destructive Investor Behavior. Be an Investor…not a Trader. From 1994 to 2013, the average stock fund returned 8.7% per year while the average stock investor earned only 5%. We call the gap between these results “investor behavior penalty”. Driven by emotions like fear and greed, they succumbed to negative behavior such as: 1) Pouring money into the latest top performing fund or asset class expecting the winning streak to continue 2) Avoiding areas of the market that have performed poorly, assuming recovery will never return 3) Abandoning their investment plan by attempting to successfully time moves in and out of the market, a near impossible feat.
  2. Keep long term goals and objectives in mind while refusing to be swayed by emotions or “Hot Tips”.
  3. Diversify. There is something to the old adage “do not keep all of your eggs in one basket”.
  4. Consider adding Alternative Investments. These would be investments that are not stocks or bonds. Examples are Commodities, Real Estate, Reinsurance, Life Settlements, Managed Futures.
  5. Pay attention to your Bond holdings. Rising interest rates could have negative effect on the value of exiting bonds. There is no time like the present to take inventory of what works, what doesn’t and what can be improved upon.

Friends in their 40s Discussing Building Wealth

Last month, I wrote about the Top Ways to Build Wealth in Your 50s. This month, let’s talk about wealth building in your 40s. Dare I say that in your 40s, you’re hitting your mid-life stride?  40-somethings are kind of walking a tightrope with their wealth – maximizing earnings, minimizing debts, and prioritizing needs and desires.

There’s a lot to think about in your 40s: if you don’t have kids in college, chances are you’re at least thinking about saving for college. Usually, your late 40s into your 50s are your top earning years, so with your higher income, you might be thinking about buying a larger house, traveling, golf club memberships, or luxury cars. It’s easy to get distracted!

So, what’s a 40-something to focus on if you’re serious about building wealth? Here are my top tips:

Save 50% of every raise

In your 40s, you’ll likely have promotions and job opportunities that can lead to significant increase your income. Lifestyle creep is prevalent at this stage of life, and it’s tempting to adjust your lifestyle upward with each bump in income. Proceed with caution!

Instead, a smarter wealth building strategy is to save at least 50% of every raise. That may even seem generous to some, who might save an even larger chunk of their raises. Obviously, if you can save even more, that is even better. But if you’re wanting to travel, or do some fun things you couldn’t afford to do before, committing to only spending 50% of each raise will help you build a larger savings/401k and narrow the gap to retirement.

Create passive income streams

With the extra income you’re generating in your 40s, another wealth building strategy is to create a passive income stream. Passive income streams usually require an initial outlay of cash or investment money and time, but after some work, will bring you consistent income without a lot of effort on your part.

One good example of a passive income stream is a rental property. There are some dividend stocks you can invest in as well that can bring regular payouts. You can also turn a hobby into a business, or become a silent partner in a business. Every person’s path is different, but it’s something to consider in your 40s!

Curb the cost of kids

Did you know the cost of raising a child from birth to age 17 is $491,000 for families earning over $100,000 year? A significant portion of that cost (30%) is estimated to be clothing and “miscellaneous”.  If you’re saying “yes” to all of your kids’ requests, it might be time to start saying “no”. If not for the sake of your wealth building, for the sake of the kids.

For more in-depth info on that, I recommend “The Financially Intelligent Parent” by Eileen and Jon Gallo, who propose an 8 step strategy to raising successful, generous, and responsible children.

Get fit

Surprised by this one? Many people are! Yet, research shows that people who exercise at least three times a week earn 6% to 9% more than those who do not, according to research by Cleveland State University professor Vasilios Kosteas. Initially the correlation may not make sense to you, but diving in, Professor Kosteas cites growing evidence that fit employees are more productive and manage work-related stress better, which can lead to faster career advancement.

Get Life Insurance

This is another one that you might not think about as a wealth building strategy. And honestly, it’s more for your family than you. Buying a life insurance policy helps ensure that all the money you’ve worked hard to save for retirement is used for its intended purpose, should you pass away in the meantime.

For example, if you died without life insurance, your spouse or family members might have to dip into those accounts to pay off debt or assist in burial expenses. Life insurance helps ensure that your family is taken care of, and that they won’t have to spend your retirement money prematurely.

I recommend speaking with an insurance advisor on the type and amount of coverage to invest in. The point is, if you don’t have it, the time is now!

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Bart A Zandbergen, CFP® is a Registered Investment Advisor with Optivest, Inc and a Registered Representative with Gramercy Securities, Inc. Investment advisory services are offered by Optivest, Inc. under SEC Registration and securities are offered through Gramercy Securities, Inc., member FINRA & SIPC, 3949 Old Post Road, Charlestown, RI, 02813, 800-333-7450.


Investment advisory services are offered by Optivest, Inc. and securities are offered through Gramercy Securities, Inc., member FINRA & SIPC. Securities are not FDIC-Insured, are not bank-guaranteed and may lose value. This website is provided solely for Optivest, Inc. clients and does not intend to provide investment, tax or legal advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. All references to Optivest on this website refer to Optivest, Inc. (a California Incorporated company) and all references to Optivest Properties refer to Optivest Properties, LLC. Optivest, Inc. does not represent that the securities, products, or services discussed in this website are suitable or appropriate for all investors. Information herein is taken from sources deemed reliable and neither Optivest, Inc. nor Gramercy Securities, Inc. is responsible for any errors that might occur. Optivest, Inc. may only transact business in those states and international jurisdictions where we are registered/filed notice or otherwise excluded or exempted from registration requirements. The information on this website is not intended for distribution to, or use by, any entity or person in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Optivest, Inc. or Gramercy Securities to any registration requirement within such jurisdiction or country. The opinions expressed by vendors or third parties are those of the author(s) and are not necessarily those of Optivest, Gramercy or their affiliates. All links to other Internet websites (“hyperlinks”) are included as a convenience for our visitors and Optivest, Inc. assumes no liability for the content or the presentation of such linked sites. No part of this website may be reproduced in any form, or referred to in any other print or electronic publication without the express consent of Optivest, Inc. The material has been prepared and is distributed solely for information purposes and is not a solicitation or an offer to buy or sell any security or instrument or to participate in any trading strategy. No representation or warranty is provided for any software that may be downloaded from this website. Copyright © 2016 Optivest, Inc.

Securities offered through Gramercy Securities, Inc., 3949 Old Post Road, Charlestown, RI 02813, 1-800-333-7450

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