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Disruptions in Income

By Matthew McDaniel | Advisor

We know that throughout our working careers, income doesn’t always rise by three percent every year. Some years we have high income, some years low, whether because of variable earnings or a job loss. When you have a year with a notably lower income, there’s a great planning opportunity.

While many opportunities get more attention at year-end (Roth conversions, tax gain harvesting), it’s helpful for us to anticipate transitions when possible. Of course, we usually can’t forecast income interruptions like layoffs or other job losses.

That said, if you do anticipate a disruption in income, let us know. This could be a planned transition, sabbatical, or exit from your career. After all, lower-income years usually equate to lower tax brackets–something we want to help you take advantage of.

Remember, you can’t go back three years later and ask the IRS to apply a lower tax bracket retroactively. If you have a below-average income year, don’t miss your window!

Will the Bull Market Turn Three?: In actuality, the bull market is still quite young. Looking at the previous 11 bull markets, the average bull lasted more than five years. Going back 50 years, once a bull market made it into its third year, there were multiple years left every time:

There will always be dramatic headlines, and reasons to worry, pause or wait on investing. The daily chatter of headlines is often a distraction from the productivity, innovation, and growth of a robust global market. The daily battle for your attention is real. As you review this chart, remind yourself of the old saying, “Bears sound smart, bulls make money.” The daily chatter you hear is a perspective not supported when you consider historical norms.

Habits of a Millionaire: We read a recent article about the habits of a millionaire. New research points to the idea that habits could put you on the right path to success. Some millionaires say the secret of their success is the rules of the rich. For example:

  • One millionaire shared that taking 30 seconds to make his bed each morning is a critical part of his daily routine. It is reminiscent of this Navy Seal speech that is now a decade old. Researcher Randall Bell found that if you make your bed each morning, you’re 206% more likely to become a millionaire (Rich Habits, Rich Life, 2016).
  • Bell also discovered that another habit of the financially well-off was time for yourself before the workday begins. On average, successful individuals wake up three hours before their workday begins.
  • Writing to-do lists is a common practice
  • Reading for 30 minutes or more per day
  • Controlling emotions
  • Talking less, listening more

There was an acknowledgment that this takes effort. It’s not simply implementing the habit; it’s sticking with it. And, perhaps most surprising, the research revealed that one habit millionaires had in common in the workplace is they avoided gossiping about their co-workers. I’m curious, what link there is between self-control and success?

 

 

 

 

 

*The views expressed represent the opinions of Compass Ion Advisors, LLC, as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website at https://adviserinfo.sec.gov/firm/summary/166418. Past performance is not a guarantee of future results.