Obsidian Market Update 3/31/2023
Banks by the Numbers
Quick quiz: How many U.S. banks failed during the Great Depression, between 1980 and 1994 and in 2023?
If you answered 9,000, 1600 and two, we want you on our trivia team, and you’ve put current events into the broader perspective. That can be difficult in our non-stop, 24-hour news cycle.
Not only can we access financial information on several tv news channels, hundreds of podcasts, and multiple satellite and syndicated radio networks, we can pull up information on our phones 24/7. It’s easy to see how the failure of two banks can feel like 1600 or even 9000.
What’s Different Today?
One of the biggest differences between bank closures in the 1930s and today is the existence and guarantees of the Federal Deposit Insurance Corporation (FDIC). Depositors in the 1930s lost everything. Today, accounts of up to $250,000 per depositor are insured by the FDIC in FDIC-insured banks.
Another key difference is regulation. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to establish banking rules regarding risk. A key provision of that Act was the Volker Rule which not only limited risk taking, but also increased the amount of funds banks must hold to fulfill unexpected withdrawal requests from depositors.
What’s the Same?
Unchanged at Obsidian are the principles of smart investing, namely setting long-range goals, managing risk by diversifying a portfolio and taking advantage of opportunities as they arise.
As the banking situation continues to unfold, rest assured that we are monitoring it, and its effect on the broader economy in general, and your portfolio in particular. We are constantly on the lookout for new opportunities, while we keep close tabs on how well your investments are aligned with your long-term goals.
If you have any questions about what’s happening in the markets, in the banking industry or within your portfolio, please don’t hesitate to contact us. We may not be available 24/7 but, unlike the talking heads of mass media, we are invested in your success.
How We Help
The Sunset of Estate Tax Exemptions
In 2017, the estate tax exemption for individuals was $5,490,000 (or $10,980,000 per couple) with a top estate tax rate of 40%. In 2018, that number jumped to $11,180,000 per individual and has been increasing incrementally since. The current exemption of $12.92 million (or $25.84 million per couple means that, since 2018, few estates have been subject to any federal tax. Unless Congress acts, these generous exemption amounts will end at the end of 2025 and will revert to the $5.49 million and $10.98 million thresholds.
Every estate situation is unique, but common to all is the need to act during one’s lifetime to shield an estate from unnecessary taxation. We are working today to help our clients prepare for this tax change, so if you’d like to learn more about available tax-saving strategies, please give us a call.
Spring Has Sprung!
For many of us the first day of spring was buried under a foot of snow, banking turbulence, interest rate changes and NCAA basketball upsets. Not so for the gardeners among us. For them, March 20 marked the official opening of the gardening season.
The University of Maryland suggests that we wait until April to begin planting vegetables outdoors, so we’ve been looking at some water- and back-saving tools. Check out these self-watering pots and planters and raised vegetable beds. Watering wands do double-duty by saving water and sore muscles by regulating water volume and directing water to hard-to-reach areas.
If you haven’t already invested in a hat that protects you from harmful UV rays, looks and keeps you cool as well, we found one that covers all bases and comes in as many colors as a summer garden. Happy and healthy gardening!
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member FINRA/SIPC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.