Financial Planning: Tariff Time
The International Trade Administration defines a tariff as “a tariff or duty is a tax levied by governments on the value including freight.”
When we experience bouts of market volatility, it can be disconcerting to watch our account balance decline in value. As we have pointed out many times in the past, some level of volatility is always inherent in investing. As Walter Sheel said: “Nothing happens without risk, but without risk; nothing happens.”
The best thing about the stock market is that over the long term it tends to rise. If, however, your bank account declines due to fraud, that money is unlikely to ever be returned. In recent weeks, I have heard of con men attempting to steal money from the unsuspecting (and in one case, succeeding). I even found myself being the target of a confidence scheme.
In my case, I am embarrassed to say that it took my longer than I would have expected to suspect that the “officer” informing me of the warrants out for my arrest on a “recorded line” for failure to appear at Jury Duty was a con man, as was his “supervisor.” They were even able to “spoof” the phone number of the Sherrif’s office that I looked up online. It was only after I was told I needed $2,250 in money orders from Stop & Shop to post the bond required that it became clear that this was a scam. Still, they persisted in calling me and threatening arrest until I drove around the corner to our police station and got an officer on the line. The con men promptly hung up.
Remember that the term “con man” comes from “confidence game,” as the “con” can only succeed if he/she gains your confidence. While in the past, cons often took the form of letters from Nigerian Princes, and chain letters, today text, email, and phone scams are rampant. And cons are getting increasingly sophisticated with deep fake technology allowing criminals to impersonate you or a loved one.
So, it pays to be vigilant and on alert for fraud. It is a good idea to monitor your credit reports on an annual basis. You can access your reports for free through annualcreditreport.com (not “freecreditreport.com”). You should also create an account at each of the three credit rating agencies: Experian, TransUnion and Equifax, and freeze your credit report to block identity thieves. You can always lift the freeze temporarily if you need to apply for a new loan.
The government site with useful information on how to freeze your credit report and many other tips is: https://www.usa.gov/
A strong dollar makes foreign goods cheaper, like the French and Italian wines that I enjoy, but makes it harder for exporters to sell abroad as their goods are more expensive. Because the US dollar is the world’s reserve currency, it enjoys an “exorbitant privilege” which mostly means that we can borrow more cheaply that we would otherwise be able to do. The CFA Institute just published a survey in October 2024 on where the dollar may go in the future called: “The Dollar’s Exorbitant Privilege”. 63% thought that the US dollar would lose its reserve currency status. In part this is because 61% thought that the US would not be able to reduce its debt-to-GDP ratio which has soared from 31% in 1981, to 63% in 2007, and up to 123% today.
I don’t have a crystal ball, but the odds have risen that foreigners will start demanding a higher return to invest in our bonds.
The International Trade Administration defines a tariff as “a tariff or duty is a tax levied by governments on the value including freight.”
In times of uncertainty and/or adversity, refocusing on the fundamentals is a time-tested solution.
When markets feel as shaky as they do now in the United States, it is normal to ask: Is this time different?
IAG is very excited to announce that Jon Bock, CPA/PFS has been promoted to Director of Tax Planning at Impact Advisors Group.