San Diego Financial Experts Share Top Money Moves for 2024
Wealth-building strategies and pointers from San Diego’s financial professionals
As 2024 begins, many San Diego residents are looking for ways to make smart financial decisions and build their wealth. To help guide individuals in the region, the Union-Tribune reached out to several financial professionals with different areas of expertise. These experts shared their top money moves and strategies for the year ahead. From transferring wealth to heirs to taking advantage of tax-free investing and global market opportunities, here are the insights and recommendations from San Diego’s financial experts.
Transfer Wealth to Heirs:
According to Laura K. Zeigler from Bessemer Trust, 2024 presents an ideal opportunity to gift wealth to younger generations. With the expected increase in the annual gift tax exclusion and the amount each U.S. citizen can pass during their lifetime, donors should take advantage of the existing gift exemption before it is reduced. Zeigler suggests transferring assets to family members through a trust or other means. This technique freezes the current value of the donor’s interests in those assets and can result in discounts to the asset’s value, maximizing the gift exemption.
Consider Roth IRA and 529 Plans:
Dick Pfister from AlphaCore Wealth Advisory highlights the changes to rules around Roth accounts and 529 college savings plans. Unused 529 plan funds can now be directly transferred into a Roth IRA, tax- and penalty-free. This new legislation allows children to start saving for retirement with unused 529 funds. Pfister also mentions that Simple and Simplified Employee Pension IRAs can now be treated as Roth contributions, providing business owners and employees with more options for retirement savings.
Tax-Free Investing with REITs:
For individuals concerned about capital gains taxes on appreciated real estate, Pfister suggests considering a tax-free exchange into a Real Estate Investment Trust (REIT). By participating in a 1031/721 exchange, individuals can make a tax-free exchange of their existing real estate for ownership in a large institutionally managed REIT. This strategy allows individuals to sell their shares over time to fund their retirement, with the potential for a step-up in cost basis for heirs.
Think Global for Portfolio Diversification:
Joseph S. Tanious from Bessemer Trust emphasizes the importance of considering a global perspective when constructing investment portfolios. Given the high inflation observed in Southern California, diversification beyond regional investments is crucial. Tanious recommends exploring opportunities in global stocks and bonds to mitigate regional risks and capture potential growth in various markets. He also suggests thoughtful security selection and diligent research for maximizing returns in the stock market and high-quality bonds with longer duration to benefit from falling interest rates.
Diversified Borrowing for Property Upgrades:
Danny Michael from Satori Wealth Management shares a case study of using multiple sources with lower interest rates for property upgrades. In one example, a client wanted to do home renovations but was deterred by high interest rates on a home equity loan. Michael proposed a combination of strategies, including taking a loan through the client’s 401(k) plan, utilizing a credit card with a 0% interest introductory period, and using capital losses to offset capital gains. This approach allowed the client to fund the project with lower interest rates and tax advantages.
Conclusion:
As San Diego residents navigate their financial decisions in 2024, the advice from these financial professionals offers valuable insights and strategies. From transferring wealth to heirs and taking advantage of tax-free investing to considering a global perspective for portfolio diversification and utilizing diversified borrowing strategies, individuals have various options to build their wealth and make the most of their financial resources. It’s essential to carefully consider each strategy’s implications and consult with a financial advisor to determine the best approach for individual circumstances.