Austin, a city known for its vibrant culture and booming business environment, is already a technology hotspot. This rapidly expanding boomtown includes an influx of entrepreneurs, professionals, and executives who, as successful high-earners, can benefit from sophisticated wealth management advice and services.
Whether you’ve been managing your wealth yourself until now, recently relocated to the Austin area as a career move, or are looking for a new Austin wealth management team, one thing to consider – a wealth management firm to help you accumulate and preserve wealth in various economic and market conditions.
As a wealth management firm operating in Austin for over 25 years, we specialize in creating sophisticated planning and investment solutions for high-net-worth individuals and their families. In this blog, we will address three frequent concerns we hear regularly:
- How can we structure our portfolio to help protect our accumulated wealth during significant market volatility while capitalizing on potential growth opportunities?
- With the recent market fluctuations and tax law changes, what strategies should we consider to manage capital gains or take advantage of losses?
- How will current market volatility impact our estate’s value and the succession planning strategies we’ve implemented?
#1: How can we structure our portfolio to help protect our accumulated wealth during significant market volatility while capitalizing on potential growth opportunities?
You’ve heard the saying, “Don’t keep all your eggs in one basket.” The same can be said about your investment portfolio. Ensuring your assets are adequately diversified to help protect against significant losses is important, particularly during periods of excessive market volatility.
Diversification is a key wealth management strategy that helps manage risks and strives to produce more consistent rates of return[1].
While there are numerous ways to diversify investments, sector investing can be an effective strategy during economic uncertainty (e.g., inflation, recession).
Sector investing involves targeting various industries impacted differently by the same economic conditions. For example, companies in the consumer staples industry may benefit when consumer discretionary companies decline. Other sectors include technology, healthcare, energy, and financial services, to name a few.
We believe a focus on sector investing is a strategy that has the potential to improve returns while managing risk. For example, a few potential benefits associated with sector investing include:
- Customized Risk Management: By selecting sectors that are anticipated to remain stable or thrive during uncertain times, you can manage some risks associated with market-wide declines. For instance, the healthcare sector might experience stable earnings during uncertain times.
- Growth Opportunities: Concentrating more of your assets in a particular sector that is either undervalued or poised for growth allows you to pursue the financial benefits.
- Flexibility: Sector investing is a rotational strategy based on a market outlook for multiple sectors and industries. For example, reduce exposure to the automobile industry and increase or rotate your investment into the oil & gas sector.
- Diversification: While sector investing involves some concentrations, it can offer significant diversification and risk management benefits. Investing in multiple sectors may reduce exposure to the underperformance of particular sectors.
#2. With the recent market fluctuations and tax law changes, what tax strategies should we consider to manage capital gains or take advantage of losses?
Market fluctuations can be unnerving, but they can also present effective buy/sell opportunities with the right tax strategies in place. A comprehensive tax planning strategy can help you avoid paying unnecessary taxes, which can increase your retirement savings.
Here are some of the more common tax planning strategies to discuss with your Austin-based wealth management team:
1. Tax-Loss Harvesting: If some of your investments have incurred losses, consider selling them to offset capital gains on better-performing investments. By doing so, you create value for your underperforming assets. It’s a disciplined tactic that can turn a losing investment into a tax benefit.
2. Hold Onto Investments Longer: If you’re considering selling an investment with a significant gain, consider holding onto the investment for at least one year. Doing so can qualify the investment for long-term capital gains rates, which are typically lower than short-term rates.
3. Gift Appreciated Assets: Instead of selling a highly appreciated asset and paying a substantial capital gains tax, consider gifting it to a loved one in a lower tax bracket or donating it to charity. This not only reduces your taxable liability, it can also provide you with a charitable deduction.
As an Austin-based wealth management firm, we can help you create sophisticated, tax-advantaged investment strategies to help you protect your hard-earned income and assets.
#3. How will current market volatility impact our estate’s value and the succession planning strategies we’ve put in place?
Market volatility and economic headwinds, such as inflation, recessions, or stagflation, can significantly impact the value of your estate. That’s why we believe comprehensive planning should be a cornerstone of your wealth management strategy.
An estate plan isn’t just about distributing assets after the surviving spouse is gone. It’s about safeguarding what you have accumulated and maximizing its value when distributing it to your heirs. Your plan should provide clarity and direction for the seamless transfer of your wealth, to help ensure that your life’s work continues to serve your vision long after you are gone.
Additionally, by managing the tax your estate pays, the more significant the impact on your heirs and the causes you care about. As a high-net-worth individual or couple, you can protect your assets and help ensure your financial goals and legacy thrive for generations. Volatile markets and economic conditions are just part of the journey.
About Beck Capital Management
At Beck Capital Management, we understand that high-net-worth individuals like yourself face unique financial challenges. Our seasoned team of experienced Austin-based wealth managers is dedicated to providing you with tailored financial solutions driven by an unwavering commitment to responsiveness, transparency, and cost efficiency.
We recognize that your investment journey is unique, and more than a cookie-cutter approach will be required when navigating the complex financial waters that impact you. To learn more about our customized wealth management services, connect with us.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation or advice of any kind. The information contained herein may contain information that is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor.
(Beck Capital Management) does not offer legal or tax advice. The application and impact of tax laws can vary widely based on the specific facts involved. As such, this information should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. Before making any decision or taking any action, you should consult with a qualified professional.
[1]Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market. They are methods used to help manage investment risk.