Category Archives: Financial Tips

Stay in the Know: What a Biden Presidency Means for Your Personal Finances

Biden Tax Plan

The landmark 2017 Tax Cuts and Jobs Act (TCJA 2017) championed by Former President Trump effectively overhauled the tax code. Perhaps most significantly, the corporate tax rate was slashed from 35% to 21%. President Biden has proposed raising that limit to 28%, among other measures. Included in his tax proposals:

  • Increasing the tax rate on the top bracket of those earning >$400k from 37% to 39.6%
  • Long-term capital gains taxed on income above $1M would be taxed at 39.6%
  • Further limiting itemized deductions

With the majority so thin in the Senate, these changes are likely to be pursued through the budget reconciliation process, which is also where the TCJA 2017 was born. This only requires a simple majority to pass the Senate, circumventing the 60-vote supermajority needed for ordinary legislation.

Potential Implication: If a higher capital gains rate becomes a reality, high net worth earners may want to consider realizing a portion of their capital gains now during a lower tax regime. This is especially true of assets with shorter-term horizons or any speculative holdings. Any securities sold could be re-purchased after 30 days, effectively resetting the cost-basis. (See the bottom of this article for related disclaimers).

Retirement Savings

Retirement contributions may also see some changes. Currently, deductions for 401(k) contributions are structured such that the same amount of money contributed from high and low tax-bracket would result in the higher earner receiving a bigger deduction. Policy experts expect this to be flattened at some point in the Administration.

Potential Implication: This is another reason to save save save for retirement. Any changes in this area would only encourage highly compensated employees to max out on their retirement benefits while the current tax incentives remain in place.

Estate Planning

One of President Bidens less talked about, but particularly controversial, proposals include changes to a provision called “step-up in basis” in inheritance law. Rather than capital gains tax being applied to the original cost of the inherited asset, the basis is reset to the fair value at the time of inheritance, effectively eliminating any capital gains tax liability. Biden has called for elimination of this tax treatment which would significantly increase tax liabilities for heirs.

Despite his indicating interest in pursuing changes, experts say it would be particularly difficult for President Biden to eliminate or change this provision.

Potential Implications: The estate tax or “death tax” has long been a political battleground. A potential repeal of the “step-up in basis” provision may incentive the gifting of appreciated assets as a means of estate reduction.

Higher Education

Another frequently addressed issue on the campaign trail was the skyrocketing cost of education. Included in the Biden Administration’s proposals:

  • Two years of free post-secondary education (community college, trade school, or other job training)
  • Free tuition at public college and universities for households making less than $125k
  • Canceling $10,000 for student loans*

In addition to voicing support for loan cancelation, President Biden has suggested further changes to the student borrowing rules. When federal student loan forbearance expires at the end of September, the rules may have changed. Proposals include capping payments at 5% of discretionary income, forgiveness after 20 years of qualifying payments, and other provisions.

*Such a provision was notably left out of Biden’s stimulus proposal

With such a narrow majority in the Senate, where many bills ultimately require a 60-vote supermajority, some of his more ambitious plans are unlikely to be implemented. Policy experts say the changes to personal finance will probably not be on par with the TCJA 2017. Instead, expect subtle, mostly symbolic tweaks.

Please note that the topics of tax, education, and investment planning are highly individualized and dependent on your personal financial situation, so always consult an appropriate specialist before making any decisions. The information above is intended to be a discussion starter and does not constitute financial advice or recommendations.

Financial First Aid Kit For Turbulent Times

Investors will unfortunately feel the excruciating pain of bear markets every now and then. The temptation during these turbulent times is to sell everything, run for the hills and sit on the sidelines. The reason is because as human beings, loss aversion is deeply embedded into our psychological makeup. The pain of losing money is always more powerful than the pleasure of making money. People simply don’t want to lose what has taken a lifetime to achieve, what has been gifted to them, or what has been derived from the sale of a home or a business. Seeing this money evaporate in a moment’s notice is more than gut-wrenching.

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The Golden Rule of Investing: Avoid Losses!


Photo by Michael Longmire on Unsplash

For those that like to dabble in investing as a hobby, you know the feeling when something is too good to be true. You’ve probably lost money at some point in your life on a speculative investment – the “hot stock” of the day or the latest Tech IPO that’s supposed to revolutionize the world. As professionals at Cox Capital who deal with investments everyday, we’ve seen it all and can offer this simple piece of advice to ensure long-term success – DON’T LOSE MONEY! It sounds simple, but believe us when we say that this is absolutely the holy grail of investment principles! Avoiding losses is the polar opposite of what you see advertised by brokers and the mutual fund firms these days (especially in the midst of major bull markets).

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Investment Books that we Recommend

To become proficient at investing you have to work hard. It’s as simple as that. There’s no getting around it. I have found that the best investors read everything that they can get their hands on. They like to turn over the rocks and “peel the onion” so to speak. They read investment (and non-business) books by the handful, scour several newspapers per day and routinely analyze the financial filings of hundreds of companies consistently. Of course, having a good mind helps too – but nothing replaces reading. Even the most successful investors of all time such as Warren Buffet, Peter Lynch and John Bogle were voracious readers. They (or you) should never stop learning!

Folks ask us all the time what are our favorite investment books. We thought that the list below may be of interest to you and/or your children:

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