What Tax Planning Strategies Are Most Investors Missing? | 09:35
As year-end approaches, many investors focus on investment performance while overlooking tax planning opportunities that could have a meaningful impact on their long-term financial outcomes. In this episode, Catherine Magaña, Rachel Ivanovich, and Greg Carroll discuss several tax planning strategies investors may want to evaluate before December 31, including Roth conversions, tax gain harvesting, tax loss harvesting, and opportunities to maximize retirement account contributions.
The conversation highlights why tax planning should be an ongoing part of the financial planning process rather than something considered only during tax season. The hosts explore how strategic year-end decisions may help investors improve tax efficiency, preserve more of their wealth, and better position themselves for retirement. Topics include Roth conversion opportunities, harvesting investment gains and losses, maximizing contributions to retirement accounts, and reviewing planning opportunities before important year-end deadlines.
The episode also examines current market conditions, AI-related stock volatility, economic growth trends, diversification strategies, investor sentiment, and what these developments may mean for long-term investors. By connecting market events with sound financial planning principles, the discussion provides practical insights for investors seeking to make informed decisions before the end of the year.
If you’re wondering how to reduce taxes, improve tax efficiency, evaluate Roth conversions, use tax-loss harvesting, or identify overlooked year-end tax planning opportunities, this episode offers actionable ideas investors should consider discussing with their financial and tax professionals.
Date Recorded: 11/05/26
Disclosure:
WWM Financial is an SEC Registered Investment Advisor
The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry and how we may be able to assist. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. As always please remember investing involves risk and possible loss of principal capital. Tax considerations presented may not be appropriate every individual circumstance. A tax professional should be consulted before making any decisions about your tax liability. wwmfinancial.com | 760.692.5190
Transcript
00:00:01:22 – 00:00:23:03
Catherine Magaña
Welcome. I’m Catherine Magaña here with Rachel Ivanovich and Greg Carroll, where we’re here to provide you insights on the markets tax planning, financial planning and much more. Today is November 5th and we’re here to give you an update. So we just had the midterm elections. The markets have been fluctuating the last few days, which we’ll touch on.
00:00:23:05 – 00:00:45:20
Catherine Magaña
The AI trades under scrutiny and there’s still, talks about potential, rate changes between now and the end of the year. So we, you know, obviously we do have a clearer picture now of what’s to come, at least for the elections behind us. And so, and also, I know in the past we’ve talked about, after midterm elections, the markets 12 months following are usually up.
00:00:45:22 – 00:00:46:10
Catherine Magaña
But we’ve had.
00:00:46:15 – 00:00:54:00
Greg Carroll
While they’ve always been up since World War two. So we’ll knock on wood and. Exactly.
00:00:54:02 – 00:01:20:06
Catherine Magaña
Okay. So I guess, looking at where we’re at as of yesterday’s close. The Dow Jones was up at 11. At about 11%. Your today. The Nasdaq at 10.73. The S&P 500 at 12.32. And the Russell 2000 was up at 15.11. And so yesterday we saw the stock surge after a blue wave in the midterm elections. And so obviously yesterday the markets reacted pretty positively.
00:01:20:08 – 00:01:43:16
Catherine Magaña
But then you look at today which is this morning and November 5th and now the markets are now taking in consideration some of the AI, chips. And those sectors are really underperforming this this morning. And we’ll see what happens between now and the close. But basically all of the gains pretty much from yesterday in the Dow Jones and S&P are wiped out.
00:01:43:16 – 00:02:08:18
Catherine Magaña
And the Nasdaq is taking a pretty big hit. I think we’re down about 5%. And obviously that comes into play with kind of the looking at potentially kind of AI stock in sectors and data centers. And is there going to be a slowdown in some of those areas? And so when you look at a Democratic sweep, some of the things that come in from an investment perspective, health care services, renewables, health related areas could benefit.
00:02:08:25 – 00:02:30:03
Catherine Magaña
While biopharma financials, AI related sectors and large software platforms could, forego or go, now have greater uncertainty because of, if there’s more regulations coming their way. So obviously the markets will see. But, you know, it’s been pretty volatile the last couple days. I think that the markets are just trying to figure out, you know, what’s to come and what’s next.
00:02:30:06 – 00:02:37:01
Catherine Magaña
And obviously the tech and AI stocks are taking a hit. And I know Vince is here this week to comment but we’ll get let’s take on this.
00:02:37:01 – 00:02:38:27
Greg Carroll
Still plenty to say next.
00:02:39:00 – 00:03:02:21
Catherine Magaña
We’ll get his take on this for next week looking at where we’re at with interest rates. So as of this morning, the one year CD is at about 4.65%, and the one year Treasury at 4.44 and the ten year treasuries come down slightly. So we’re now at 4.83. So that’s come down slightly over the last couple weeks, looking at the probability of a rate change.
00:03:02:21 – 00:03:27:00
Catherine Magaña
So we’re looking at, at the next meeting in December, we’re looking at a rate hike potentially right now the probability is about 75%. And then I was looking at mortgage rates, as of this morning, on the Wall Street Journal that said, the 30 year is at 7.22 and the 15 year at 6.60. So those have come down slightly over the last few weeks, even though they seem a little higher.
00:03:27:00 – 00:03:49:09
Catherine Magaña
But they’ve come down, and they’re not the low rates we had from several years ago, but they’ve, they’ve come down slightly recently. And so obviously, you know, the markets are fluctuating and moving. That’s why we always reiterate the importance of having a financial plan, your structured investments, and making sure you have an investment allocation that’s appropriate for your risk tolerance.
00:03:49:09 – 00:03:58:19
Catherine Magaña
And obviously, we like the growth component. We like the value component. But you have to make sure that you have enough, that will last. And then you can weather some of these market movements.
00:03:58:22 – 00:04:12:22
Greg Carroll
Yeah. The I think one of the best things about the election was it was very decisive. There is no, you know, second counts or, you know, close races. I mean, it was a clean sweep, which was a refreshing. Well, and.
00:04:12:22 – 00:04:19:06
Catherine Magaña
I think I from my takeaway with this is I think people don’t want, you know, they’re sick of inflation, they’re sick of higher food gas one.
00:04:19:06 – 00:04:19:23
Greg Carroll
Hundred percent.
00:04:19:28 – 00:04:28:10
Catherine Magaña
Or I mean, there’s just a lot of things, on the table. And I think obviously now hopefully going forward, we can get past the elections and see what’s to come.
00:04:28:12 – 00:04:49:11
Greg Carroll
I think, you know, one of the things that caused the, big rally yesterday was, you know, with the sweep by the Democrats that maybe the Iran war might come to a close sooner rather than later with some of the hope. And then, because of that, you know, if the war stops sooner, oil could come down.
00:04:49:11 – 00:05:16:03
Greg Carroll
It went down 9% yesterday. And that would cause potentially the FOMC not to have raised not to have to raise rates next year, because if oil comes down, you know, energy prices, gas inflation should be able to come down. I don’t think that’s the case. I don’t think Iran is going to give up control of the Strait. I don’t think they’re going to, agree to, you know, that no more nuclear stuff.
00:05:16:06 – 00:05:42:18
Greg Carroll
Unfortunately, that’s my view. But, hopefully I’m wrong. But one interesting thing too is back in 2018, Trump 1.0. In those midterm elections, there was a trade war. We’ve got a real war going on now. The fed was hiking rates back then like they are now. And then the market actually rallied right after the election when the Democrats took I think they just took the House that time.
00:05:42:20 – 00:06:27:26
Greg Carroll
But, right after that rally, the market did go down for like 6 to 8 weeks. So, you know, there was a government shutdown and more potential rate hikes, which clearly could be on the table again this year. So, you know, a lot of stuff has been coming out of the market. I’ve talked on this podcast several times about all the spin these hyperscalers are doing, and I was looking at some statistics that the five hyperscalers the Amazon’s, Microsoft, Oracle, Google and Meta’s and the spend that they’re doing two years ago and late 24, the estimates for spend just from Amazon was about $75 billion for this year, a year ago, the
00:06:27:26 – 00:06:56:03
Greg Carroll
estimates went up to about 140 billion, where they’re actually spending about 225 billion, three times what the estimates were 24 months ago. And they’re expected to spend almost 300 billion next year. And you go right across all five of them, you know, the the increase in spending. Now, maybe some of those estimates could come down with the Democrats slowing down these data center build out.
00:06:56:03 – 00:07:15:03
Greg Carroll
So, you know, they’re still going to build these things and there’s still a lot on the books and already in, you know, construction mode. But maybe it slows down a little bit. But the spend is really I mean, it’s hard to fathom all that money and you’ve got to have a return on that invested capital at some point.
00:07:15:05 – 00:07:40:14
Greg Carroll
And, you know, with this, I, you know, there’s still, a lot of stuff, kind of the jury’s out on it. There’s some companies are becoming much more efficient with it. Maybe it’s eliminating, you know, some jobs, but there’s other companies that aren’t necessarily seeing the big benefit, and they might not keep spending that kind of money for these AI bots and all of that stuff.
00:07:40:14 – 00:07:58:29
Greg Carroll
So next year is going to be, I think, really, really telling with, with the AI, trade. So, you know, stay tuned. And, and maybe Vince will have a little more insight on the earnings because that’s what really drives the stocks at the end of the day.
00:07:59:06 – 00:08:19:01
Catherine Magaña
Well, it’s interesting you say that, as also looking at, you know, the positive things as economic growth remains strong. The US GDP came in at 3.7. So the economy is still expanding at a healthy pace. Consumer spending and investment investments are resilient. So although it feels the last couple of days at least yesterday it was nice for the markets are up.
00:08:19:01 – 00:08:27:29
Catherine Magaña
But then today you kind of wipe out those gains. But you know we see it each day. But the reality is long term. And even looking at year to date, which we mentioned the path.
00:08:28:01 – 00:08:31:02
Greg Carroll
To full employment, I mean the economy is really doing.
00:08:31:02 – 00:08:41:28
Catherine Magaña
Well. Yeah. So we’re at a good place financially. I just think there’s there’s a shift, there’s some change, and we just have to be mindful from a tactical approach of, okay, what’s to come and how can you know. We fine tune some things with our strategies.
00:08:41:29 – 00:09:00:24
Greg Carroll
All the news and everything has been AI. This AI that I mean all year and if not longer. So there’s a lot of other ways to make money in the stock market and stay in diversified. And understanding your portfolio and your risk tolerance makes a big difference. So, yeah, it doesn’t always have to be hot and sexy to make money.
00:09:00:27 – 00:09:19:22
Catherine Magaña
It’s hard when that’s been leading the way for so long. Yeah, it’s, but, you know, things do fluctuate and you have to be able to adapt. So let’s again, we’re not Pollyanna saying everything’s wonderful. But we also know that, you know, even if we. And where we’re at now, you’re today, we we’re still in positive territory and pretty much all the different indexes and sectors.
00:09:19:22 – 00:09:35:12
Greg Carroll
And I mean, some of these stocks that are down 20, 30, 40% in the last month are still up for the year. So, you know, sometimes things get a little ahead of themselves. So it’s not time to panic by any means.
00:09:35:14 – 00:09:39:05
Catherine Magaña
So here we are. We’re kind of getting towards the end of the year November.
00:09:39:06 – 00:09:40:22
Rachel Ivanovich
About 60 days till taxes.
00:09:40:23 – 00:09:42:15
Catherine Magaña
This week. You have.
00:09:42:17 – 00:09:43:17
Rachel Ivanovich
Countdown to start.
00:09:43:17 – 00:09:44:07
Catherine Magaña
Ups.
00:09:44:10 – 00:09:47:10
Rachel Ivanovich
There’s always a countdown to for it to end for to start.
00:09:47:12 – 00:09:51:21
Greg Carroll
So 60 days before our next the next tax payment to right.
00:09:51:23 – 00:10:20:05
Rachel Ivanovich
Approximate approximate January 15th. Yeah. But I mean think about it. So we have a lot of temporary one big beautiful bill act provisions that we have that will expire at the end of 2028. Hoping for a not a lot of tax changes for the upcoming season. We had a lot of changes last season, but some things that you can control right now are people talk a lot about tax loss harvesting, but people don’t talk a lot about tax gain harvesting.
00:10:20:05 – 00:10:46:13
Rachel Ivanovich
So what if you had a year where your income was down a little bit, maybe you were you retired, you don’t have the salary or I don’t know, rental property didn’t perform as well. So maybe it might be a year where you can actually sell and realize some gains. So we still have, you know, a couple of what, eight weeks before the end of the year, still to look at the portfolio and see, you know, what strategically, should I sell?
00:10:46:15 – 00:11:03:02
Rachel Ivanovich
The other thing is Roth conversions. It’s a big time of year to be looking at how much you’ve you’re, you know, where you’re going to land for the year income wise. Doesn’t make sense because we have some historically low tax brackets right now. So and we know what those brackets are right now. So maybe it makes sense.
00:11:03:09 – 00:11:26:26
Rachel Ivanovich
Let’s do some conversions. Fill up the lower tax bracket. And then the the last one really is if you are still working and contributing to 401 K’s to 403 BS or any other qualified plans, you still have time to make those contributions to your, you know, workplace for A41 K’s and tax deferred accounts and also health savings accounts.
00:11:26:26 – 00:11:45:03
Rachel Ivanovich
If you have those. I think that their health savings accounts are great. You do have until April 15th of next year to fund for this year. And same thing goes for IRAs Roths. I wouldn’t necessarily contribute to a Roth unless you talk with an advisor just because and maybe even a traditional because there are limit limits, income limits.
00:11:45:05 – 00:11:48:25
Rachel Ivanovich
So make sure you’re asking your questions and doing your due diligence. First.
00:11:48:27 – 00:11:54:19
Rachel Ivanovich
A lot of rules with those IRAs, Roth IRAs, conversions. And it’s not a simple process.
00:11:54:21 – 00:12:16:15
Rachel Ivanovich
It’s really some interesting there’s reverse conversions to that I’m looking at. So for instance, I have a client who has traditionally had really high income, and they have contributed to a traditional IRA year over year. And so that they didn’t deduct those contributions. So they have what’s called basis. So they’ve already paid tax on a portion of it.
00:12:16:17 – 00:12:37:00
Rachel Ivanovich
But they have a profit sharing plan like a Keogh plan. And so if we take the money out of the IRAs and dump it into the Keogh plan, basically it frees up all of that already taxed money sitting in the IRA so we can do the conversion. And she won’t pay any tax because of the pro-rata. Yeah, because of the pro-rata rules.
00:12:37:00 – 00:12:45:27
Rachel Ivanovich
So there’s some tricky little things. If you have both 401 K accounts and IRAs and basis in your IRAs.
00:12:45:27 – 00:12:49:01
Greg Carroll
Here’s a word I haven’t heard in about 25 years.
00:12:49:01 – 00:12:59:08
Rachel Ivanovich
I know it’s not funny, but yeah, but you can if if it allows if the plan allows for contributions or transfers. So there’s some tricky planning to do.
00:12:59:12 – 00:13:20:02
Catherine Magaña
So just to reiterate, Rachel, your comment on partial Roth conversions. We have been having those conversations all year long. And then, these next couple of months, we’ll continue those conversations because once again, sometimes your income changes or you sell a property or something happens in your life. And so we typically try and wait a little bit later in the year to make sure there’s nothing that’s going to change.
00:13:20:02 – 00:13:21:09
Catherine Magaña
The picture pending. Yeah.
00:13:21:11 – 00:13:31:29
Catherine Magaña
Yeah. So this is you know, a time where we can revisit and if you would like us to take a look at that for you, let us know. We’re happy to do so. So I think we covered a lot of ground today here.
00:13:31:29 – 00:13:33:00
Rachel Ivanovich
Ingredient. So yes.
00:13:33:02 – 00:13:34:22
Greg Carroll
I can tell you that maybe Peggy.
00:13:34:24 – 00:13:51:02
Catherine Magaña
So I looked at the fee increase index this morning. Kind of like before the market opened and we were at 27. Fear. But then right before I came in here, because I wanted to see because the markets have been fluctuating, we’re now at Extreme Fear, which is 20. Wow. So obviously.
00:13:51:02 – 00:13:52:04
Greg Carroll
How low does it go?
00:13:52:06 – 00:13:54:00
Catherine Magaña
It can go all the way down to zero.
00:13:54:00 – 00:13:55:17
Greg Carroll
Oh it can go to zero. Oh wow.
00:13:55:18 – 00:13:58:00
Rachel Ivanovich
So it’s extreme extremes to here. Yeah.
00:13:58:05 – 00:13:58:17
Catherine Magaña
So we’re.
00:13:58:18 – 00:13:59:19
Greg Carroll
Double extreme.
00:13:59:21 – 00:14:18:03
Catherine Magaña
It’s my understanding. So we’re now in extreme fear. But once again you know we’re here to guide you and make sure you have a, an investment plan and a, financial plan that works. And so if you have any questions, we’re here to guide you and go over that with you. So we want to thank you for joining us and we’ll see you next week.
00:14:18:05 – 00:14:19:23
Catherine Magaña
Thanks.
00:14:19:25 – 00:14:50:25
Please stay tuned for important disclosures. The opinions expressed in this program are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry to determine which investments may be appropriate for you. Consult your financial advisor prior to investing any past performance discussed during this program is no guarantee of future results.
00:14:50:28 – 00:15:09:28
Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always, please remember investing involves risk and possible loss of principal capital. Please seek advice from a licensed professional. Financial is a registered investment advisor with the SEC.
