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Paul Carroll

Paul Carroll
In Aricles

Understanding Retirement Income Tax

When you retire, you’ll likely draw your income from several sources—such as retirement accounts, taxable investment accounts, and Social Security Benefits. Each of these sources is taxed according to its own rules. So, in order to accurately plan for your retirement, you need to know what these rules are, whether (and when) you’re required to make withdrawals, and how paying taxes on distributions will impact your overall financial goals. Here’s a breakdown of the most commons sources of retirement income and how they’re taxed: Traditional IRA and traditional 401(k) Withdrawals from traditional tax-deferred retirement accounts are taxed at your normal income tax rate. Once you reach a certain age, you must start taking—and paying taxes on—required minimum distributions (RMDs). The IRS changed RMD rules in 2020. If you reached age 70½ in 2019, you should have taken your first RMD by April 1, 2020. If you reached age 70½ in...
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Paul Carroll
In Videos

How To Protect Against Inflation?

With the central banks throughout the world printing money with abandon, how are we supposed to protect ourselves and our portfolios from the risk, ever-present, of runaway inflation? Central banks are using quantitative easing to print money for good reason. The greatest danger is deflation, but as a result we are awash in cash. And from an asset point of view, we're seeing asset price inflation, acid bubbles. But how do we protect ourselves? We know that deflation is being managed as best as central banks can, but how do we protect ourselves from inflation damaging conservative portfolios? We have a number of options. First, most obvious, is gold. The problem with gold is something called contango, which led to oil prices being negative briefly back in March, the cost of storage and the fundamental volatility. Real estate has its own problems. Again, it's a great inflation asset, but right...
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Paul Carroll
In Videos

IRS Identification Verification Letters – A Scam or For Real?

A lot of our clients have been receiving these IRS Identification Verification notices. Some of these clients have even paid taxes and are wondering "Is this for real; is this fraud?" And if you get one, what should you do about it? So if you get one of these letters and you are owed a refund, you need to ask CPA if the letter appears legit. You can do it online, and we'll include a link at the bottom of this blog post. Or you can call the number on the letter. Something you need to know is the IRS will never call you. So if you have received a call from the IRS, you can pretty much assure it's fraud. And if you are concerned about fraud, with the letter, another thing you can do is you can Google the phone number that's on the letter. If it's the...
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Paul Carroll
In Videos

How Will This Election Year Affect the Markets?

How will the presidential election impact the markets? There's a lot of concern out there. Every four years, I feel like I have the same video. Though this one is a little different. Every four years there's this concern over markets. Democrats are afraid of what happens if the Republicans win; Republicans are afraid of what happens if the Democrats win. But as you'll see in the attached chart, markets clearly don't care who's going to win the election. Possibly a more accurate statement is markets are fairly good at discounting the election outcome. Given how close we are to the election right now, it's increasingly likely the markets have already priced in the outcome. What's interesting though, is politics and economics and the markets all tend to live in separate parallel universes. In many cases, they are totally uncorrelated. This election is particularly heated. There's a deadly pandemic you...
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Paul Carroll
In Videos

What’s Next for the Cares Act and the Economy?

So the Cares Act is beginning to unwind. In fact, without an act of Congress it ends July 31st. Will the economy unwind with it? As the Cares Act unwinds in just the next day or so, is the economy going to unwind with it? We know July 31st the unemployment benefit of additional $600 is expiring. Now there is an interim proposal to keep it going until a negotiated settlement has been reached. I think the Republicans would like to continue the unemployment benefit, but with just an additional $200 instead of $600. And the other issue is evictions. There's been a moratorium on evictions for all properties that are backed by a government-subsidized loan - Freddie Mac, Fannie Mae, all of those. That has actually already hit the sunset provision. Again, if they don't extend it, will there be massive evictions as well as the loss of unemployment...
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Paul Carroll
In Videos

United Airlines Early Out Offer

Probably everybody at the airline knows now that there's a letter of agreement for voluntary pilot separation leave. It's a pretty interesting deal. Is this something that you should take? A couple of pointers about this offer. I mean, I'm not going to go through the whole thing. We'll put a link to it (see below), but the briefings that ALPA’s sent out are pretty darn good, but there are some relevant salient points. One, the pain effect, is when you bid for the package. Why is that salient? The next year it's going to be ugly. Pay cuts may actually happen, or maybe a reduction in the guarantee. And if there's a reduction in the guarantee, for example, then that brings the guarantee down to maybe 60, 61 hours if it's a 15% reduction. That kind of reduction, that's only a 10-hour spread for working versus not working. Also,...
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Paul Carroll
In Videos

The Fed is buying corporate bonds now…what’s next, stocks?

Now the fed is looking at corporate bond purchases through exchange traded funds. Welcome the new world of yield curve control. But what does that mean for you, your portfolio and the economy at large? Yield curve control. Nice, fancy word. It's largely focused on keeping interest rates low, primarily at the long bond end. Because let's face it, we're borrowing a lot of money. And to the extent that that money being borrowed is long-term debt, it does behoove the government to keep the cost of that debt down. But not just for the government. It also affects the economy and industry at large. With low corporate rates right now, there is the question, is this even necessary? When we talked about buying corporate bonds back in April, the spread between corporate bonds and treasuries was rather large. But now that spread's fairly narrow, and that suggests the corporate...
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Paul Carroll
In Videos

Will $3+ Trillion Ignite Inflation?

The United States has injected over $3 trillion into the economy and it's debating even more. How will that impact inflation? Being an election year, the administration is a little bit more willing to prime the pump through November, than maybe in a more traditional year. Will this pump priming trigger inflation? Those of us who remember the 1970s know that inflation can be a scourge. It saps your purchasing power, destroys the value of a fixed income. There's reason to fear inflation. But to understand inflation we need to understand what drives inflation. As any freshman Economics student will tell you, inflation is really too many dollars chasing too few goods. But there are two saucers of inflation. One is Demand-Pull inflation. Money times velocity equals the money supply - the availability of money. What is velocity? Velocity is how many times a year the money is spent. So...
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Paul Carroll
In Videos

A Hot Market with Record-High Unemployment and Diminished Consumption: Will it Retest the Bear?

Printing money and FOMO (Fear Of Missing Out) has really boosted the market, but high unemployment and a diminished consumption cannot just be wished away. A lot has been made of the fact the market is back to where it was in early March. More relevant to me is that the prices are where it was back in late October when we had historically low unemployment and a market, sorry, an economy, firing on all eight cylinders. The market valuations, to be at the same price, are significantly higher today. What we have is the euphoric, lighter fluid effect. We're not seeing a V-shaped recovery in the economy. We are fortunate we're avoiding the "L." It appears the predicted "Nike swoosh" is what is actually happening. And yet by Labor Day GDP, will still be two-thirds of what it was pre-Covid, and unemployment will be in double digits. It would...
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Paul Carroll
In Videos

The State of Post-Covid Energy in 2020

Brent oil is finally reaching $35. A sustainable - albeit low figure - up from a low in April of just $16 a barrel. A 21 year low. What is the future for the Energy industry? How's that going to impact both the nation and, specifically, Houston, Texas? Oil demand is picking up. In fact, when you look at the numbers it's pretty remarkable. However, these numbers are up from a very low base. OPEC and Russia's squabble finally has resulted in a truce, and from May 1st they agreed to reduce supply by about 9.7 million barrels per day. No small amount. However, at these prices, the ongoing decimation of America's shale industry may at some point in the future result in us once again being somewhat - not completely - dependent on Middle Eastern oil. That dependency in itself is a little bit concerning because the Middle East...
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