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New $3 Trillion Stimulus Bill to Help Americans Passes the House

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By Patrick Ryan CFP, AWMA®  and Steven T. Merkel CFP®, CHFC®

A new coronavirus rescue bill was passed through the house, backed by House Democrats. The bill would direct an additional $3 trillion to state and local governments, health systems, another direct payment to Americans, and a range of other initiatives. However, Democrats and Republicans disagree over how to deal with the economic slowdown.

The new legislation would also send a second round of stimulus checks to millions of Americans. Republicans voiced their rejection, describing it as a wish list that would go nowhere in the Senate. Democrats argue that not acting now will be the more expensive course in the long run and that we should take advantage of the historically low-interest rates[1]. The bill will now move on to the Senate.

Within the partisan back-and-forth the real issue is how to restart the economy and direct much-needed relief to those most desperate areas of our society.  Will the next round of funding be enough to sustain Americans as health officials warn that the pandemic and fallout are likely to drag on through the summer and possibly into the fall?  Will additional stimulus funding devastate our future generation’s ability to prosper?  These are the questions facing our lawmakers while they determine how best to get Americans back to work.

There are elements of activity that spark hope however.  The resiliency of Americans and American business has been tested time and time again, through world wars, terrorist attacks, financial and natural disasters.  The innovation we’ve already experienced has been impressive from schools and businesses moving functions online to factories re-tooling entire product lines to meet the needs of healthcare workers. Companies are finding new ways to utilize existing technology to help stop the spread of the coronavirus[2]

The efforts to approve more relief come as United States COVID-19 cases top 1.56 million and American deaths from the disease surpass 92,333, according to data provided by Johns Hopkins University.  As the U.S unemployment rate spiked to 14.7% in April, states started to lift lockdown restrictions and business closures designed to slow the outbreak.3

If you have any questions about this new legislation and how it may impact your future financial plans, please feel free to reach out to your CAS advisor.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.


[1] https://abcnews.go.com/Politics/house-democrats-unveil-3t-relief-bill-aid-states/story?id=70642730

[2] https://www.cnbc.com/2020/04/15/hot-spots-of-innovation-as-a-result-of-coronavirus-pandemic.html

3 https://www.cnbc.com/2020/05/15/house-aims-to-pass-a-3-trillion-coronavirus-relief-package-friday.html

Maintain Financial Security for Well-Being During Hard Times

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Originally Published In Naples Daily News︱ May 14, 2020︱ Interview of Jill Ciccarelli Rapps CFP® by Blue Zones Project SWFL Director of Marketing and Communications, Sebastian Saitta

CLICK HERE TO REGISTER

When it comes to well-being, financial security plays a major role. In fact, financial well-being is one of five common elements along with physical, career, social, and community that people need to thrive in their lives according to the Gallup well-being index. With COVID-19 making headlines and many witnessing and personally experiencing the financial fallout, it is normal to feel worried and uncertain.

As you should make every effort to stay physically and mentally healthy during trying times, it’s critically important to maintain financial health as they can often be interrelated. Having a solid grip on financial well-being can better prepare you for what life may throw your way.

“What is important during tough times like COVID-19 is that it tests your financial health,” says Jill Rapps, CFP, Financial Advisor at Ciccarelli Advisory Services, Inc. “This is a time to learn about what you may do differently or what worked well.”

While your financial well-being or overall financial situation is unique to you, there are key factors to keep in mind to help maintain a positive status.  Jill shares these tips:

  1. Start saving money early and on a systematic basis. Be sure to “pay yourself first” by saving a portion of every dollar that comes your way.
  2. Never spend more than you make. The key ingredient is to understand what it takes to cover your essential expenses, and then what you may have leftover, after you save a portion, use to purchase discretionary items.
  3. Document your expenses. Running your finances is like running a business. Your results should be documented so that you can review them several times throughout the year and make any necessary modifications
  4. Know where you are before you can understand where you need to go. It’s important to document your assets and liabilities (balance sheet) in a way that you can measure your progress, again at least once a year.  These two exercises are essential for being able to make good financial decisions.
  5. Have a “rainy day” fund. This can be used for one-time expenses that come up unplanned, i.e. your daughter needs help for a move, or, give yourself permission that it may be used to supplement your income as we are going through a challenging time like COVID-19.
  6. Build financial “staying power”. This is important so you can not only sustain your family and yourself but also thrive through a challenging time by being able to focus on opportunities.
  7. Take the emotions out of investing. This sounds easy but our basic human tendency is to run from fear – sell low and buy high which of course is the opposite of what you should do if you are a good investor.

Just like physical exercise, forming financial habits that you can stick with is key to creating positive outcomes in the long run. “Good financial habits must work well for you,” says Jill. “If we are forced to do something that doesn’t fit our personality it probably will not become a habit, it may look more like our New Year’s Eve resolutions – not sticking!”

Jill recommends designing what you want your financial health to look like, and then develop a pathway that works with your lifestyle.  For example, some people love detail and will work with specific software to document all their expenses and make sure everything balances to the penny, while others just put away money in “goal” buckets and whatever is leftover they can spend. “Either way they can both work to meet financial goals but working with a financial advisor can help as part of their job is to create a pathway for you to succeed financially, keep you on track and help you implement,” says Jill.

Often, the right questions you ask yourself are key to revealing the right steps to take to achieve financial well-being. Jill notes that this is an excellent time to slow down and recommends asking yourself what kind of financial future will be most impactful for you.  If you are not financially stable during this time, ask yourself what you need so that next time you will be more stable. How should your money align with your deepest values?  What is the highest and best use for your money? 

“This challenging time will be a time we will remember,” says Jill. “It will have a lasting effect on all our lives and in different ways, and we can learn from this time and decide how it will make an impact on our financial choices. Sometimes our best plans don’t work the way we thought they would so stay nimble, stay flexible, and have the ability to welcome change when it knocks at your door. We have to remember that this too shall pass.”

FREE FINANCIAL WELL-BEING WEBINAR – Looking for financial guidance during COVID-19? We have partnered with Ciccarelli Advisory Services to present complimentary webinars on simple yet effective ways to help you and your family during this challenging time. These webinars are separated by topic so you can choose which one relates best to your current situation. You will also have an opportunity for live Q&A to answer your most pressing questions. To register, click on the links below.

Tuesday, May 19th, 5:30 pm
Feeling financially “squeezed”? Reduced income? Lost job? Learn about tools and resources to get you back on track!

https://bit.ly/2zcCTxj

Thursday, May 21st, 10:00 am
Retired and concerned about your income and investments during this challenging time?

https://bit.ly/2z9SSfV

Wednesday, May 27th, 5:30 pm
Are you an individual or small business owner looking to uncover new financial opportunities?

https://bit.ly/3c6dZOA

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

To RMD or Not To RMD….

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By Josh Espinosa, CFP®, CIMA®, and Jasen Gilbert, CFP®

Spring has always been a special time of the year for us. For years we have had a standing tradition of getting together to enjoy offshore fishing and catching any of the great Bluewater pelagic species including Mahi, Tuna, and Wahoo. Once in a while, we are even lucky enough to catch and release a billfish.  

What we have learned over the years is that a successful trip is a result of having a good plan, teamwork, and the right tools. How does this relate to financial and retirement planning?  

Currently, account holders of Individual Retirement Accounts (IRA’s) and defined contributions plans who have reached the age of 72 (previously 70 1/2), are required to take an annual required minimum distribution (RMD), withdrawing a percentage of their account value. In response to the recent pandemic and economic fallout, the CARES Act federal stimulus package waived the RMD requirement for 2020. This provision aims to give retirees’ account balances more time to recover before RMDs resume in 2021.    

When it comes to deciding whether or not it makes sense to waive your RMD for this year, there are some factors to consider. For example:

  1. If you don’t need the income, then you might consider stopping your distributions for 2020.
  2. Individuals who had already taken their RMD’s in 2020 might be able to roll it back into their account or another eligible retirement account. If you were diagnosed with COVID-19 there are other options as well.
  3. This could be a great time to consider establishing a Roth IRA with assets that would otherwise have been taken as RMD’s. As the account is considered after-tax, there is also no taxable consequence for withdrawals taken after the first 5 years.
  4. Under the new SECURE Act, Roth IRA assets must be distributed to the beneficiaries within 10 years. This applies to certain IRAs as well.
  5. For certain select cases, a Roth conversion may be an option for you.

Again, the rules can be complex, so please speak with your financial advisor or tax professional regarding this and other RMD planning opportunities.

When it comes to your financial and retirement plan, we think that there is no substitute for having a good plan and team in place to navigate these financial waters and hopefully take advantage of some opportunities along the way.  

If you would like to learn more about the CARES Act and other planning opportunities, please join us on May 19, 21, and 27 as we partner with the Blue Zones of Southwest Florida for a series of virtual financial workshops. Please see the following link for the invite and event details

tiny.cc/BZPfinance

Update:

Due to current conditions, we feel it is best to continue to meet with you either by phone or video conference only. If you would like to meet via video please let us know when we call to schedule your next meeting.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Register Today For Our Financial Well-Being Webinar Series!

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Do you feel overwhelmed by the amount of information available to you and don’t know what direction to take? Concerned about the sustainability of your income and market volatility? Between the new tax law that recently passed and changes from the Stimulus Program, there are many crucial financial decisions you might be making that could impact your long-term financial wellness. Our team has partnered with Blue Zones Project SWFL to bring a series of educational webinars aimed at providing simple steps and resources you may be able to utilize to help guide through this turbulent time.

The topics with corresponding dates, times, and Eventbrite links are as follows:

“Lost Income and Need Guidance”

Tuesday, May 19, 2020, from 5:30-6:30 p.m.

Link: https://bit.ly/2zcCTxj

“Individual or Small Business Owner Looking for Opportunity”

Thursday, May 21, 2020, from 10:00-11:00 a.m.

Link: https://bit.ly/2z9SSfV

“Retiree and Want to Secure Income and Understand the New Tax Law”

Wednesday, May 27, 2020, from 5:30-6:30 p.m.

Link: https://bit.ly/3c6dZOA

Attendees must register through the Eventbrite link.

For questions or inquiries please call the Blue Zones Project Southwest Florida at 239-624-2312.

Energy-Efficient Home Improvements

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Kay M. Anderson CFP® and Judith G. Alexander-Wasley MBA, CFP®

During this unprecedented time of social distancing, we are spending more time in the home with our family. Working from home, teaching our children, and focusing on home improvement projects from our deferred to-do lists, have consumed us. This time has allowed us to re-evaluate our home and create a wish list of updates to address when we feel comfortable welcoming contractors. 

While a wish list may include many items, it may be beneficial to prioritize the list and establish a feasible budget for the planned updates. In some instances, projects may take longer and cost more than the estimate. Initially, determine your goal for the upgrades and ask yourself the following:

  • Are the improvements designed to benefit your family’s needs and lifestyle? 
  • Can you repurpose your living space rather than perform an overhaul? 
  • What is the value of updating the style of the space? 

Additionally, beyond the desire to make improvements to maximize space and aesthetics, are energy-efficient options appropriate. Advancements in technology provide a vast variety of energy-efficient options: 

  • Replacement of high-energy heating systems and appliances:  Homes over 15 years old may benefit from a new air conditioner, furnace, or boiler as heating systems more than 15 to 20 years old are considered inefficient by today’s standards. 
  • On average, home appliances, including clothes washers, dryers, dishwashers, refrigerators, freezers, air purifiers, and humidifiers, account for nearly 20 percent of your home’s total electric bill. By replacing the appliances in your home with ENERGY STAR certified appliances, you are making an investment that will reduce your energy bill for years to come, which is especially important when you recognize that electricity rates are increasing every year. 
  • Installation of energy-efficient windows and doors:  Newer window models do a much better job at keeping the interior temperature regulated by not allowing much hot or cold air to escape. Additionally, windows with wood frames or wood-clad frames offer the best value when it comes to insulation.
  • Install programmable smart thermostats: A minimal cost option that enhances heating and cooling efficiency by allowing homeowners to set climate control for when no one is at home or when everyone is in bed.
  • Install Solar Panels:  Before considering powering your home with solar energy, homeowners should investigate their energy use and consider potential efficiency upgrades. Knowing total electricity usage, and considering low-cost, and easy-to-implement efficiency measures should be considered before choosing solar. 
  • Upgrade Home insulation:  How much insulation does a house truly need? The U.S. Department of Energy has created a fact sheet to help homeowners decide if their insulation is sufficient for their given climate. https://www1.eere.energy.gov/library/pdfs/insulation_fact_sheet.pdf. Newer homes are often well insulated, while houses several decades old, or older, can often benefit from an upgrade.
  • Use of energy-efficient lighting: Saving money on lighting could be as easy as switching to LED or CFL bulbs. New light fixtures can reduce lighting costs, which may account for up to one-third of a home’s overall electricity bill.
  • Maximize the use of natural light: Natural light is another option for reducing reliance on electricity. Aside from adding value to a home, skylights or larger windows can be a great option for cooler climates because they let more direct sunlight into the home’s interior. This increases passive solar gain, adding free natural warmth during the winter.
  • Installation of energy-efficient water heater: Tankless water heaters produce hot water on demand rather than keeping it hot around the clock, thereby using much less energy. Standard water heaters have improved over the past decade in terms of efficiency, so any upgrade will likely result in water and energy savings.

In summary, all of these improvements lead to energy savings, and most will also add value to the home. Homeowners who want to be certain they are not missing any obvious improvements can enlist the help of an efficiency inspector through the preparation of an energy audit.

Incentives for Making Improvements: Residential Renewable Energy Tax Credit

If your home improvements take you down an energy-efficient path, it’s important to know that some equipment qualifies for the Residential Renewable Energy Tax Credit. These include solar, wind, geothermal, and fuel-cell technology.

According to the U.S. Department of Energy, you can claim the Residential Energy Efficiency Property Credit for solar, wind, and geothermal equipment in both your principal residence and a second home. But fuel-cell equipment qualifies only if installed in your principal residence.

Taxpayers who upgrade their homes to make use of renewable energy may be eligible for a tax credit to offset some of the costs. Renewable energy tax credits are available through the end of 2021. Claim the credits by filing Form 5695 with your tax return.

If you have questions on improvements you may be considering, we invite you to contact our office to speak with your financial advisor. 

References:


TurboTax. (n.d.). Energy Tax Credit: Which Home Improvements Qualify? Retrieved from https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-improvements-qualify/L5rZH56ex


Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits


Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits


Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Federal Income Tax Credits and Other Incentives for Energy Efficiency. (n.d.). Retrieved from https://www.energystar.gov/about/federal_tax_credits

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Oil Supply & Demand: What is Happening?

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By Steven T. Merkel CFP®, CHFC® and Samantha R. Webster CFP®

Due to the current economic conditions caused by the COVID-19 virus, air travel is down, personal and business driving is down, and the price of fuel is at the lowest levels seen in quite some time.

Low Price Levels

On April 20, U.S. crude oil sharpest decline in over 30 years, due to a slump in demand. That day, West Texas Intermediate (WTI) crude for May delivery fell below zero for the first time in history. (1)

During December 2019, WTI crude oil traded at over $60 per barrel. On April 23, 2020, the price had dropped down to $16.50 per barrel – an over 70 percent drop in price.

Meeting of the Giants

In March, Saudi Arabia and Russia had a big disagreement. The Saudis wanted to cut oil output to help slow or stop the price erosion that had happened due to the drop in demand. The Russians wanted the output cut too but didn’t want to be the ones doing the cutting.

In April, OPEC (23 nations) and the other oil-producing countries agreed to cut 9.7 million barrels a day starting on May 1st, which is about 23 percent of their production levels. While this agreement will reduce the oil supply levels, many experts believe that this still won’t have much effect to counter the fall-off in demand.

Price Drop and Recovery

When the prices of one sector of the market drop so quickly, the move often is felt by other markets. Over time, continued low oil prices could lead to lower capital spending, higher unemployment figures, and credit market trouble as companies struggle to pay their bills.

The bright side is that lower oil prices mean cheaper gasoline for consumers, and relief for companies with high energy use (e.g., airlines, cruise ships, chemical firms, etc…). However, cheaper oil may pose a risk to the American energy industry, especially with the recent slowdown in transportation.

Ciccarelli Advisory Services is keeping a close eye on the oil markets to monitor whether this historic move may ripple through other areas or create opportunities for investors. 

We invite you to contact our office to speak with your financial advisor if you have any questions.

1. FoxBusiness.com, April 20, 2020

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Paycheck Protection Program Has Depleted Funds

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Kim Ciccarelli Kantor CFP®, CAP®

It was announced on Thursday, April 16th, 2020, that the Small Business Administration (SBA) Paycheck Protection Program (PPP), enacted by the CARES Act, had depleted the $349 billion allocated to the program and will not accept new loan applications at this time. Applications for the program were first released on April 3 and within 13 days funds were completely exhausted.

The $10 billion that was set aside for Economic Injury Disaster Loans (EIDL), a loan advance that can provide up to $10,000 in emergency economic relief to businesses currently experiencing economic difficulties, has also run out of available funds. The SBA stated that it is currently unable to accept any new applications for the PPP or EIDL programs based on available funding and that it is also unable to enroll new PPP lenders.

The Paycheck Protection Program was created through the CARES Act, the $2.2 trillion relief bill enacted by President Donald Trump to provide economic relief to businesses, families, and individuals financially affected by the COVID-19 pandemic. PPP loans issued by the SBA are authorized to provide small businesses with loans to pay eight weeks of salary, benefits, and other eligible costs. The loans will be forgiven if all employees are kept on the payroll till June 30th and the money is used for payroll, rent, mortgage interest, or utilities.

There is a possibility that lawmakers will approve an expansion to the program in the coming week, which could include $300 billion in additional funds for the program, however, details of this expansion are still being ironed out.* Small business owners who are waiting on this expansion may want to verify they are exploring their full range of financial options since it is unclear at this time if and when additional loans will be made available.

If you have any questions about this announcement or how it may impact your future financial plans, please feel free to reach out to your CAS advisor.

*As of Thursday, April 23, 2020, the Federal Government approved another round of $321 billion in funding.

Sources

Paycheck Protection Program. (3AD). Retrieved April 23, 2020, from Small Business Administration Website

Peasley, M. A. (n.d.). Paycheck Protection Program Funds Depleted and Economic Injury Disaster Loan Applications No Longer Accepted. Retrieved April 23, 2020, from Roetzel and Andress Law Website

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Tax and IRA Contribution Deadlines Extended

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By Lynn A. Ferraina, Advisor

Excellence is never an accident, it is a result of high intention, sincere effort, intelligent direction, skillful execution, and the vision to see obstacles and opportunities. Today we may see obstacles but as history has shown us there will be plenty of opportunities in and after this stressful time we are experiencing.

By keeping a positive attitude we will find opportunities. President Lincoln said so many years ago “this too shall pass”. And it will. The Treasury Department and the Internal Revenue Service have already begun taking steps to provide payment relief to taxpayers. Some of the relief efforts include:

Tax Day Postponement 

  • Tax filing and payment deadlines are no longer due on April 15th. In response to the COVID-19 pandemic, the IRS has extended the income tax deadline to July 15th. All taxpayers do not have to file their tax returns or pay any owed income taxes until July 15th.
  • The relief applies to individuals, regular corporations (C corps) with a calendar-year end, and others who were originally required to file an income tax return by April 15.
  • The July 15th deadline is an automatic extension, taxpayers do not need to file any additional forms in order to qualify.
  • Self-employment taxes are also deferred to July 15 and there is no limit on the amount of tax payment that is postponed.
  • The relief also applies to estimated first-quarter tax payments for the tax year 2020 that were due on April 15, 2020, but, as of now, second-quarter payment is still due June 15.
  • Gift tax returns filed on Form 709 and generation-skipping transfer taxes, however, estate tax returns are not extended.
  • IRS will not be charging interest or penalties from April 16th through July 15th. Interest and penalties will start accruing on July 16 on overdue taxes or late returns.
  • You can still file for an extension which will extend the payment deadline to October 15th, but this extension only applies to tax filing. You will still need to pay any owed taxes by July 15th to avoid penalties.
  • If you already filed and owe taxes, but have not paid yet, you still do not have to pay until July 15th.

If you filed and have scheduled payment for April 15th, the IRS will not automatically reschedule the payment, you will have to do it. If you authorized electronic funds to withdraw as part of filing your return, you will have to revoke the payment by calling the U.S. Treasury Financial Agent at (888)353-4537. If you scheduled the payment by debit or credit card, you will need to contact the card processor to suspend payments.

More Time to Contribute to Your IRA

  • Individuals have more time to make IRA contributions for 2019. Your payment is not due until July 15th. 
  • Be sure to tell your IRA custodian to apply the contribution to the 2019 tax year. 
  • The most that can be contributed for 2019 is $6,000, plus an additional $1,000 for people who were 50 or older last year. 

IRA Mandatory Distributions Suspended

  • Those individuals who withdraw a mandatory required minimum distribution (RMD) on their IRAs will be able to forgo taking the distribution for 2020.
  • The RMD delay also applies to beneficiaries of inherited IRAs
  • If someone deferred their 2019 RMD to 2020 and would have two RMDs due this year, both are waived.
  • 2020 distributions taken within the last 60 days can be put back into IRA via an indirect rollover, provided you have not made any other indirect rollovers in the past 12 months.

The coming weeks and months will test the resolve of many, but that is why our team is here, to guide you through the triumphs and the turmoil. If you have questions about the new deadlines or if you want to suspend your IRA distribution, please do not hesitate to reach out to your CAS advisory team.

We send our best wishes to you and your family this Easter and Passover!

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Although the information has been gathered from sources believed to be reliable, it cannot be guaranteed. Federal tax laws are complex and subject to change. This information is not intended to be a substitute for specific individualized tax or legal advice. FSC Securities Corp. does not offer tax or legal advice. As with all matters of a tax or legal nature, you should consult with your tax or legal counsel for advice.

Ciccarelli Advisory Services – Staying in Touch

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We understand that uncertain times can be worrisome. As you are aware, we have seen significant changes to the financial markets, the economy, and generally, our everyday lives in a very short period of time.

As a valued member of our CAS family, we want you to know that we are here for you.

We are reaching out to let you know that we are here for you in the event you need to speak with us.  Please feel free to contact us via phone or email at ciccarelli@cas-naplesfl.com if you would like to schedule a 15-minute call with us to discuss your portfolio.

We have suspended taking on new referrals, new client relationships, marketing, and all non-essential client work for the time being so that we can focus on client portfolios.

During this time, we are not only considering your financial security and asset protection, but we are also looking at opportunities.  The bottom line is we will get through this; it is just a matter of time.  Here are some considerations that are top of mind.

1)      Primary Concerns:

  • Cash Flow – Your cash flow needs are an important factor. We want to avoid selling securities at a lower value, if possible. If you have enough cash to support your cash flow needs for the next 6-12 months, let’s stay the course. If you do not, we need to connect to begin strategically raising cash.
  • Market Risk and Volatility – Volatility in the markets tend to play on our emotions.  You and I react when our account values drop as they have been over the last several weeks. This is human. The coronavirus is likely to get worse before it gets better. With that said, research and history show us that the prudent thing to do in times like these is to remain invested and focus on your long term objectives.

2)      Opportunities:

  • For individuals that have been overweight in cash, this may be the time we have been waiting for.  By observing current valuations, we feel there will be great companies and industries that are priced for opportunities to buy for long term growth, income, and appreciation. We suggest that excess cash be invested for long term objectives.  A dollar-cost averaging strategy has been proven to work well during these times.  Please contact us if you would like more information on this strategy.
  • Tax Loss Harvesting – Due to the recent pullback we are now seeing an opportunity to realize losses on taxable accounts to offset future gains.
    • For some individuals, we can take a loss by selling what may be considered a riskier asset and purchasing into an equity position that has less inherent risk…potentially reducing the overall risk level of your portfolio.
    • These losses may be useful to offset gains from the sale of positions that are significantly overweighted in your portfolio. The gains from the sale of the highly appreciated stock can be offset by the realized losses and then the proceeds can be re-invested in a more diversified way. This strategy may serve to reduce single stock risk in your portfolio.
  • If you are comfortable with your cash cushion, perhaps consider deferring or minimizing withdrawals from your portfolios.

We will be communicating on a regular basis via email, newsletters, and by telephone. If you have any questions or concerns, please do not hesitate to give us a call or email. We are here to serve you.

Stay safe and healthy!

How Anxiety Changes Our Financial Decision Making

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Paul F. Ciccarelli CFP®, CHFC®, CLU® and Steven T. Merkel CFP®, CHFC®

Across the world, a whirlwind of events brought many people’s lives to a halt. The outbreak of the COVID-19 virus has caused a global pandemic and forced massive country-wide quarantines to lessen the spread of the disease. Amid this health crisis, an oil price-war between Saudi Arabia and Russia has triggered a fall in the price of oil. Both of these events have subjected the economy and individuals to a great deal of stress and anxiety.

People may be experiencing and coping with emotions in a variety of ways including modifications to judgment and decision making processes. While this is essential in life-or-death situations, it could be unintentionally problematic regarding long-term decision-making. 

Anxiety and stress are the manifestations of thoughts and fears about the ability to manage circumstances. [1]

Anxiety developed from our natural fight or flight response which early humans relied upon to tell when a situation was too dangerous. Humans still need this process to avoid potentially fatal outcomes, but the brain can have a difficult time differentiating between actual life-threatening situations and those which we perceive as being life-threatening due to certain circumstances remaining out of our control. [2]

Most know that long-term exposure to stress is not healthy and can lead to multiple serious conditions.

One of the lesser-known effects of stress is that it changes the way we think. Through attention bias, stress and anxiety alter what we are conscious of, and how we perceive the world around us. Think of it this way, if all you think about are yellow cars, suddenly all you see are yellow cars. In reality, the roads haven’t been overtaken by golden-hued vehicles, that’s just what your mind is focusing on. [3]

Stress and anxiety will change the way your brain functions, and in turn, disrupt your long-term decision making, problem-solving, and risk calculating abilities.

By disrupting the proper functioning of neurons in specific regions of the brain, stress could prevent you from making the types of decisions you would typically make. [4] If not careful, those panicked decisions could have a lasting impact on your long-term goals and full financial picture. 

Stress even changes the way men and women think about risk.

A study from the University of Southern California found that under stress, men are often more willing to take risk while women tend to take a more conservative approach, despite previous ideas or plans. [5]

As short-term survival takes over, long-term considerations are either pushed aside or are influenced by widespread panic.

The prevalence of sensationalized news, which often relies upon fear, makes it easier to focus on certain messages and topics. This may not provide all the necessary facts needed to make informed choices. Now, more than ever, you may need to rely upon those who have an outside perspective and experience guiding during times of turmoil.

When we look at the big picture of market performance over the long haul, we find that – in many cases – the most prudent course of action is to (1) stay the course and (2) capitalize on any untapped opportunities that may arise as a result of recent events.

One of the recent updates that may be beneficial to many is the postponement of the due date for filing Federal income tax returns and making Federal income tax payments. Any person (the term “person” includes an individual, a trust, estate, partnership, association, company, or corporation) will be able to hold off on filing and paying without accruing interest or penalties till July 15, 2020. Also, H.R. 6201, the Family First Coronavirus Response Act outlines certain requirements for paid sick leave and expanding the Family and Medical Leave Act. We will continue to keep you informed if there is further COVID-19 financial relief legislation.    

Psychologist Henrie Weisinger, the author of “The Genius of Instinct,” writes that people who learn to change the way they think about their problems rather than try to overcome their anxious feelings are more likely to live stress-free lives. [1] As the situation with COVID-19 and the economy continues to evolve, we want you to remember that your CAS advisor is always available to help you look past the fear and anxiety and bring the big picture into focus as we weather the turbulent tides. Today, tomorrow, and for generations to come.

Sources

  1. https://healthfully.com/193037-what-are-the-causes-of-anxiety-from-a-behavioral-perspective.html
  2. https://www.healthcentral.com/article/what-is-fight-or-flight-and-how-does-it-relate-to-anxiety
  3. https://www.bbc.com/future/article/20160928-how-anxiety-warps-your-perception
  4. https://www.psychologytoday.com/us/blog/the-athletes-way/201603/how-does-anxiety-short-circuit-the-decision-making-process
  5. https://www.psychologicalscience.org/news/releases/stress-changes-how-people-make-decisions.html

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

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