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Planning
Some numbers to keep in mind for 2024 now that 2023 taxes are filed:
• 2024 limit for 401k, 403b, and most 457 plans are $23,000 for anyone under 50 and $30,500 for anyone age 50 or older.
• 2024 limit for IRAs and Roth IRAs are $7,000 if under age 50 and $8,000 if age 50 or older.
• 2024 SEP IRA limit is 25% of income up to $69,000. SIMPLE IRA limit is $16,000 if under age 50 and $19,500 if age 50 or older.
• 2024 annual gift tax exclusion is $18,000. This is the amount you can give anyone without having to report the gift.
• 2024 is the first year that unused 529 funds can be used for a Roth IRA contribution. The lifetime maximum that can be moved from a 529 to a Roth IRA is $35,000, subject to yearly contribution limits. The 529 must have been owned for at least 15 years and the beneficiary of the 529 must also be the owner of the Roth IRA.
What some of the top-rated fund managers are saying
Eric and I recently had the opportunity to hear Dan O’Keefe who manages one of the top- performing global funds ranked by Morningstar. Because of ten years of underperformance in international markets, Dan and many of his international colleagues are now finding great values in these assets. He also believes interest rates and inflation will remain a good bit higher than the last 15 years. He sees opportunities in electric companies due to increasing electricity costs as well as defense companies.
Kim, Eric and I listened to an American funds representative who shared that their target date funds are taking long-term positions in emerging markets stocks and bonds. These are also sectors which have underperformed for years. We will continue to stay diversified and take advantage of investments like these which may provide good opportunities.
David Giroux, who manages one of the top ranked moderate allocation funds as ranked by Morningstar, put out his annual letter to shareholders. Below are some of the items he addressed:
• While Nvidia has been the biggest beneficiary in the early Artificial Intelligence (AI) race, there are still a lot of unknowns about how AI will play out over the next five to ten years. His fund is making investments in software and cloud computing as areas which could be the biggest beneficiaries moving forward. It may not necessarily be the AI companies who make the biggest returns but the companies that benefit from that technology.
• Twelve to eighteen months ago, almost every economist, strategist, investor and CEO seemed to think we were destined to go into a recession. Today, the consensus is we will have a soft landing and no recession. The risk/reward now has a more negative skew to it as things will need to work out almost perfect to justify current valuations.
• Time and time again, by taking a longer view than the market, by focusing on trying to maximize returns over the next five years as opposed to the next five minutes, five hours or five days, we have created and can continue to seek to create differentiated shareholder value by investing against the macroeconomic consensus.
Try to keep a similar mindset moving forward. This year has started off well, but inflation has ticked higher and a contentious election is upcoming which could rattle markets. If you are tempted to make a major investment change based on what you think will happen in the next year, remember how many people were completely wrong about what would happen in 2023. Rather than thinking about what will happen to the economy and markets in next 12 months, think more about what you see happening or changing in your life over the next 12 months and are your financially prepared for those events. If you are prepared, then making a major change to your investment strategy may not be necessary.
This material is meant for general illustration and/or informational purposes only. Views expressed in this newsletter may not reflect the views of Osaic Wealth, Inc. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no financial advisor can accurately predict all of the changes that may occur in the market. This material should not be relied upon as investment advice. Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. This article contains forward looking statements and projections. Past performance is no guarantee of future results. Neither Osaic Wealth, Inc. nor its representatives provide tax or legal advice. If you don’t wish to receive marketing emails from this sender, please reply to this email with the word REMOVE in the subject line.