October 2024

October has always been one of my favorite months in the calendar year. The air begins to feel more crisp, football season is in full swing, and things can (sometimes) begin to slow down as you approach the holiday season and the year’s end. However, every four years October takes on added significance as the United States Presidential Election approaches. With an upcoming election, there is always a concern of what is to unfold and how to prepare for it.

Tax Policy Implications

Though there will be no incumbent this year, we can defer to ideologies of parties and proposals of tax policy for the current presidential candidates/parties. Some of these policies relate to increasing or decreasing rates for individuals, changes in tax rates of corporations, increases of certain credits and deductions, and many other areas involving tax. The Democrats have proposed raising the top marginal tax rate from 37% to 39.6%, while the Republicans have proposed keeping rates as they are and have been since the Tax Cuts and Jobs Act was enacted in 2018. Currently, the corporate tax rate sits at 21%. The Republican party is proposing lowering this rate to 20%, or even 15% for certain companies. The Democrats are proposing an increase in the corporate tax rate to 28%. The Democratic party is proposing an increase in the child tax credit. The Republicans are proposing an increase in the deductibility of state and local taxes for those that itemize deductions. These are only a handful of proposed items between the two parties. It is important to familiarize yourself with potential changes in tax policy and how it may affect you and your financial picture. The Tax Foundation website has a good analogy of the different platforms each candidate is proposing in its page “Tracking 2024 Presidential Tax Plans”.

Market Performance

Historical trends involving political headlines have shown markets to have short-lived rallies and dips as investors handle anticipation of what is to come. However, elections have shown little long-term effect on market performance, and do not favor one party or the other. The Standard and Poor’s 500, commonly known as the S&P 500, measures the performance of 500 of the largest companies on U.S. stock exchanges. Since 1928 there have been 24 election years. Per Bloomberg’s annual percentage change of the S&P 500 index, in those election years the index has shown an average price return of 7.49%, and a return of 7.63% in the year following the election.

What To Do

With all the political media we are accustomed to seeing, it can be easy to get excited or anxious depending on your preferences, as to what will happen next. One thing that will never change is that having a plan when it comes to your financial life is a must. If you believe that you or your business may be affected by any potential change in tax policy, do not be afraid to ask questions or contact your Certified Public Accountant and/or CERTIFIED FINANCIAL PLANNER® for professional advice or planning. When it comes to your investments, creating a plan with sights on the long-term can most often weather any situation.

Published in the Victoria Advocate

Hayden Schilling, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

Fall is officially under way. With each changing season, it has always felt to me like an opportunity to start fresh or revamp areas of my life. Recently a colleague and I visited our alma mater, Texas A&M University (whoop!) to share our experiences with a group of first-generation college students who were also starting a new chapter of their lives as college freshmen. As a first-generation college student myself, I quickly remembered what it felt like to walk on to campus for the first time and hope that I was making the right choices for my future. For anyone else walking through this life stage change, or simply wanting to revamp their financial priorities, here is a fall to do list to get you started.

Begin or review your monthly budget: Budgets get a bad rap as being overly complicated and stringent, but they do not have to be. When it comes down to it, a budget is simply calculating how much money you have coming in versus how much money you have going out. If your end number is positive (a surplus), you are living within your means and potentially have funds that you can consider investing for your future goals. If your end number is negative (deficit), you should look further to see where you may be able to cut expenses. Do you have subscription services that auto draft each month that you don’t use? Are you spending money eating out when you could be spending less by eating at home? The decisions may not always be this simple, but having a grasp of your monthly spending is crucial to your financial success.

Establish or replenish your emergency fund: An emergency fund is simply what the name implies: funds saved in case of an emergency. Your definition of an emergency and someone else’s may look different (I can assure you a vacation is not categorized as an emergency, though), but you will be thankful you’ve saved these funds when an emergency comes your way. In a recent study conducted by Empower, 37% of Americans do not have the funds saved to cover an unexpected expense over $400. Consider working towards saving three to six months of your living expenses in your emergency fund.

Check your credit report and begin building GOOD credit: Your credit report can do more than just show lenders your credit history. From impacting your living to employment situations, your credit is not something to take lightly. Companies like Credit Karma will allow you to see your credit report for free without running a hard inquiry that can impact your credit score. If you find your score is less than ideal, identify the areas that may need to be improved. For people that are young, time and payment history may not yet be on your side. Consider setting up a small bill that you are already paying (i.e. utilities, cable, internet, etc.) on a credit card to begin building your credit history. If your score is impacted by how much debt you have, consider prioritizing paying down your debts and not financing more that you can realistically pay off monthly.

None of these items are overly complicated or a quick path to success, but they are critical to your success for years to come. If you are just starting out or simply looking to start anew, know that it’s never too late to try to improve your financial situation.

Published in the Victoria Advocate.

Sara Potts is a CFP® professional and Lead Advisor with Keller Wealth Advisors.

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Financial Priorities: The Basics

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