The Tariff Games
I firmly believe that instability is one of the guiding principles emanating from the White House. There are other motivations as well, but instability is not a bug, it’s a feature.
The instability we all are being subjected to is being used as way to assert power, and as a negotiating tactic. Since most people seek stability, maintaining instability can be used to throw the other parties off balance. Or so that is how it seems to me.
It’s a New Day
A new day means a new policy. Thinking about Planning? Impossible…
Living in a Sisyphean nightmare
Let me list the many people who are being subjected to the insanity nowadays. Being a Federal employee. Having a job in a import or export dominated industry, Being a farmer who has international clients. Being a person who was born in a foreign country now living in the U.S. Owning stock. Having a retirement account. Basically everyone.
Buy Low
Since the actual low is unknowable, does it pay to buy low now? Will it go lower?
There is no answer, as the unswer is unknowable. I would never commit my entire resources at one time, but nibbling at perceived low prices isn’t always a bad thing.
An RMD Thought Experiment
When the expected RMD become large, the tax burden increases. While an every-growing IRA is thought to be a good thing, growing large enough to trigger larger RMD amounts means not only more income tax, but also means a possible trigger of the dreaded IRMAA tax.
So one possible approach is to balance the growing IRA balance by buying short-term bonds in the IRA instead of equities. Holding them to maturity means a method to guarantee that the balance on every December 31 will not be wildly large. In fact, holding bonds and CDs that mature every year just prior to December 31 would make one’s future December 31 balance known in advance. (When holding equities in an IRA means one never knows in advance the final year-end balance until that year end.)
This “hold bonds and CDs” approach has disadvantages. It means one’s balances will not take advantage of general equity growth. No equities means no dividends. It presupposes that other, non-IRA assets will suffice for one’s income needs.
It seems a radical approach to maintaining one’s assets, however I surmise it is not a viable plan. Too much can go wrong if we stick to only bonds and CDs. Future inflation is unknown, and given history and reality, inflation is more likely to increase, and substantially so. Expecting deflation is unlikely.
How to cope with today’s reversals? Let me know here.
Illustrated is a page from Katzensymphonie, created in 1868 by an Austrian painter Moritz von Schwind. Courtesy The Staatliche Kunsthalle (State Art Gallery), a fine art museum in Karlsruhe, Germany.
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