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Astoria Strategic Wealth

What a Difference a Year Makes!

Just a little more than a year ago (March 23rd, 2020), U.S. stock markets hit their pandemic low, uncertainty and fear were rampant, gatherings and businesses were shutting down, shortages of masks, paper goods, ventilators and knowledge were the headlines, and Covid was just beginning to really take its hold in the United States.

Fast forward one year later.  Covid’s death toll has turned out to be much higher than the experts’ worst predictions, we have weathered an extremely volatile transition of presidential power, and even Mother Nature dealt much of the country a debilitating cold snap. 

We are indeed, however, a resilient country! Stock markets are now at all time highs. We have created and distributed Covid vaccines in unprecedented time.  The country is opening back up.  The future is bright, and while there will always be another “but this time it’s different” scenario, every time in our country’s history, we have demonstrated that Americans can and do rise to the challenge. Are we out of the woods?  Likely not, but a steady, level response to these events, particularly in your financial plans and portfolios, will afford you the ability to benefit from the inevitable ups and downs.  We will continue to serve as your accountability partner to reduce the emotion and hype from at least financial decision making.

Now for some tactical announcements:  Federal Emergency Management Agency declared relief for victims of the February winter storms in Texas, Oklahoma, and Louisiana.  Residents of these states have until June 15th, 2021 to file various individual and business tax returns and make their tax payments.  In March, the Treasury Department and IRS announced that the federal income tax filing due date for all other 47 states for the 2020 tax year will be automatically extended to May 17, 2021.  We would be remiss if we did not look out for our CPA colleagues (and you) in encouraging you to file and make contributions by April 15th as you are able.   

As a reminder, each calendar year provides an opportunity for goal setting, resolutions and new beginnings.  We will continue to schedule Annual Plan Update(s) with each of you over the remaining 9 months.  We will let you know when you are ‘up’ and will send a Request for Information (RFI) in advance of our meeting.  This rhythm provides discipline around the planning process and a focused, efficient effort towards helping you navigate your financial freedom journey.  Of course, you are welcome to reach out at any time with changes or questions, and likewise, we will reach out to you regarding time sensitive matters throughout the year.

We will continue to release market commentary in the third week following each quarter-end. Related to this topic, we remain proactive about making sure your portfolios are constructed per our latest research and in conjunction with our research partner’s input.  Accordingly, we have made the following changes to our investment models following our year-end Investment Committee meeting(s).  At a high level, the modifications primarily further reduce expense ratios in our core investment models and are being implemented as follows:

  • Replacing WisdomTree US Quality Dividend Growth Fund (ticker: DGRW) with iShares MSCI USA Quality Factor ETF (ticker: QUAL).  New money will be used to buy QUAL and QUAL will be bought during re-balances, but DGRW will remain the tax loss harvest equivalent. 
  • Replacing iShares 1-3 Year Treasury Bond ETF (ticker: SHY) with Vanguard Short-Term Treasury Index Fund ETF (ticker: VGSH).  SHY will become the tax loss harvest equivalent and new money will be invested in VGSH.   

We have completed a large number of tax preparation meetings and look forward to assisting you with implementing any and all of the strategies decided upon.  To be clear and as a reminder, 2020 tax payments (if applicable) and Q1 estimated tax payments have been postponed to May 17th for the 47 states outside of Texas, Louisiana, and Oklahoma.  For taxpayers in Texas, Oklahoma, and Louisiana, 2020, Q1, and Q2 tax payments are officially due by June 15th.  Typical transactions at this time of year for all taxpayers include:

  • Non-deductible or deductible traditional IRA contributions (which we may be able to immediately convert to a Roth IRA if you qualify - aka Back-Door Roth)
  • Direct Roth contributions (for you and/or your teens if they had 2020 earned income and fall below the MAGI threshold)
  • Simplified Employee Pension (SEP) IRA contributions – always due at time of filing
  • 401(k) profit sharing company contributions
  • Health Savings Account funding

As per regulatory requirements, we are distributing our annual ADV and regulatory disclosure documents to you as an appendix to this report. Please let us know if you have any questions on these important documents. 

We hope that you can soon revel in the renewed opportunity to celebrate the events of spring and summer to include graduations, weddings and reunions of all sorts.  We would like to once again thank our first responders, medical personnel, and teachers who have tirelessly managed through these extraordinary times.  Your selfless service is so very much appreciated.