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Wealth Planning

Make your 2021 a financial success

10 resolutions you’ll want—and be able—to keep this year.


With the start of a new year, it’s time to set our intentions for 2021, as behavioral psychologists assure us that the first step toward achieving a goal is to articulate it. So here are 10 of J.P. Morgan’s savviest financial life resolutions for Q1 2021, which many of our clients are embracing. See how other people plan to make the most of their coming year—and speak with your J.P. Morgan team about which strategies may make sense for you to adopt.

Take stock

  • Embrace your FinTech powers. Financial technology (aka “FinTech”) lets you view all of your financial holdings, online and at a glance, even if your assets sit with numerous financial institutions. Empower your financial management with this comprehensive, timely view. So-called “aggregation” of assets used to require a legion of accountants; now, it’s a simple matter of signing up—and you can do that, too, online. To find out more about how J.P. Morgan helps you aggregate, click here.
  • Review your portfolio. The great market volatility of 2020 left many people unsettled. Now, they are taking the start of a new year as an opportunity to rethink how much risk they want—and need—to take to reach their stated goals. We recommend that you become crystal clear about the job you want each pool of your capital to do, and align your investment strategy for it accordingly. Knowing each pool’s purpose makes your monitoring and, if need be, future adjustments, more informed.
  • Define your liquidity bucket. The global pandemic and U.S. presidential election generated so much uncertainty and anxiety in 2020 that many investors stockpiled cash. But with today’s ultralow interest rates, excess cash is no one’s friend. So we’re helping clients decide how much cash or access to cash they really need. Questions we ask include: “How much do you need for 1 to 2 years’ worth of living expenses?” “Do you have any big purchases planned?” And: “would you feel comfortable tapping into a portfolio line of credit (rather than using cash) to pay your tax bill or to take advantage of a time-sensitive investment?” To learn more about how to evaluate if you’re holding too much cash, click here.
  • Find out how much you can truly afford to give and make your dollars go further. Many people want to give to their loved ones as well as to causes and organizations that matter to them. We help our clients identify their gifting capacity and how to be more effective givers: quantifying the amount they can comfortably give during their lifetime (on an annual or lump sum basis) without compromising the goals they have for themselves. We also analyze their holdings to help them determine which assets might be most efficient to gift. And we work closely with clients’ estate planning lawyers to help find the right strategies and charitable giving vehicles so they may achieve the goals they have for others. Finally, we offer unique learning opportunities to learn from global thought leaders and other peer philanthropists.

Act now

  • Take advantage of low interest rates. While low interest rates don’t boost your savings account, they do create opportunities for the liability side of your balance sheet.  Many people are refinancing and restructuring current debt to take advantage of, and lock in, historically low interest rates. They’re also exploring the many estate planning strategies that are potentially more lucrative when interest rates are low, such as grantor-retained annuity trusts (GRATs), charitable lead trusts (CLATs) and intra-family loans.
  • Think about where you want to call home for your family—and your trusts. COVID-19 lockdowns and remote work have led many people to re-evaluate where they want to live and own real estate. If you’re thinking of buying a home, consider maximizing the tax efficiency of that purchase by paying for it in cash and cash-out refinancing, then using the mortgage proceeds for investments. Doing so would allow you to classify interest on the loan as “investment interest,” which you can deduct fully against your investment income. By contrast, interest classified as “qualified residence interest” is limited to interest on no more than $750,000 of acquisition debt.

    Remember that there are important tax consequences not only for where you live but also for where your trusts are based. State laws and your family’s circumstances may have changed since the trust was first established, so we recommend having your tax advisor review your trusts’ situs to make sure it optimizes the state tax consequences for your trusts’ beneficiaries.
  • Consider alternative investments to generate yield and diversify your portfolio. With interest rates likely to remain low for the foreseeable future, we still like carefully chosen core bonds but recommend investors also look elsewhere for additional yield and risk diversification. If you have a multi-year time horizon, now may be a good time to explore alternative investments in real assets—such as real estate and infrastructure. Real assets can provide low correlation to stocks and bonds, protection against inflation and (in some cases) steady income.

Look ahead

  • Plan a family meeting. A family that plans together, stays wealthy together, in more ways than one.  We recommend that you hold a structured gathering of all your financially connected family members at least once a year and we can help you plan it, to make sure such a meeting is successful. The best family meetings encourage healthy dialogue about the family’s goals, priorities, and complete balance sheet—all your financial, human, intellectual and social capital, as well as internal and external risks. Productive meetings also go a long way to educate and empower the rising generation. For some tips on how to have more meaningful family meetings, click here.
  • No matter your age, think about retirement as a life stage worth planning for now. It happens to almost all of us eventually: Every day, nearly 10,000 people turn 65 in the United States. Even if you’re currently in your 20s and retirement feels far away, it is wise to start planning for this chapter now so you can benefit from the eighth wonder of the world: compounding. Of course, if you are approaching or beginning to navigate retirement, let’s work on addressing not only your financial but also your mental, emotional and physical well-being so your next stage will be everything it can be. Get started immediately by clicking here.
  • Take advantage of your lifetime exemption. In 2021, each individual can give, free of U.S. transfer taxes, the historically high lifetime exemption amount of $11.7 million ($23.4MM per couple). This amount is scheduled by current law to drop dramatically at the end of 2025 but if a new law is enacted, it could be cut sooner. If you have both the desire and the capacity to gift, we encourage you to consider doing so sooner rather than later. If you already have an estate plan in place, we can work with you and your estate planning lawyer to make sure that, given your current assets and legal documents, what you want to happen will actually happen.

 

 

 

 

IMPORTANT INFORMATION

This material is for information purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Please read all Important Information.

GENERAL RISKS & CONSIDERATIONS

Any views, strategies or products discussed in this video may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this video should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision.  For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.

NON-RELIANCE

Certain information contained in this video is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this video. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this video, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this video constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this video shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party.  Nothing in this video shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions. 

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Conflicts of interest will arise whenever JPMorgan Chase Bank, N.A. or any of its affiliates (together, “J.P. Morgan”) have an actual or perceived economic or other incentive in its management of our clients’ portfolios to act in a way that benefits J.P. Morgan. Conflicts will result, for example (to the extent the following activities are permitted in your account): (1) when J.P. Morgan invests in an investment product, such as a mutual fund, structured product, separately managed account or hedge fund issued or managed by JPMorgan Chase Bank, N.A. or an affiliate, such as J.P. Morgan Investment Management Inc.; (2) when a J.P. Morgan entity obtains services, including trade execution and trade clearing, from an affiliate; (3) when J.P. Morgan receives payment as a result of purchasing an investment product for a client’s account; or (4) when J.P. Morgan receives payment for providing services (including shareholder servicing, recordkeeping or custody) with respect to investment products purchased for a client’s portfolio. Other conflicts will result because of relationships that J.P. Morgan has with other clients or when J.P. Morgan acts for its own account.

Investment strategies are selected from both J.P. Morgan and third-party asset managers and are subject to a review process by our manager research teams. From this pool of strategies, our portfolio construction teams select those strategies we believe fit our asset allocation goals and forward looking views in order to meet the portfolio's investment objective.

As a general matter, we prefer J.P. Morgan managed strategies. We expect the proportion of J.P. Morgan managed strategies will be high (in fact, up to 100 percent) in strategies such as, for example, cash and high-quality fixed income, subject to applicable law and any account-specific considerations.

While our internally managed strategies generally align well with our forward-looking views, and we are familiar with the investment processes as well as the risk and compliance philosophy of the firm, it is important to note that J.P. Morgan receives more overall fees when internally managed strategies are included. We offer the option of choosing to exclude J.P. Morgan managed strategies (other than cash and liquidity products) in certain portfolios.

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In the United States, bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank managed investment accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

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With respect to countries in Latin America, the distribution of material may be restricted in certain jurisdictions. We may offer and/or sell to you securities or other financial instruments which may not be registered under, and are not the subject of a public offering under, the securities or other financial regulatory laws of your home country. Such securities or instruments are offered and/or sold to you on a private basis only. Any communication by us to you regarding such securities or instruments, including without limitation the delivery of a prospectus, term sheet or other offering document, is not intended by us as an offer to sell or a solicitation of an offer to buy any securities or instruments in any jurisdiction in which such an offer or a solicitation is unlawful. Furthermore, such securities or instruments may be subject to certain regulatory and/or contractual restrictions on subsequent transfer by you, and you are solely responsible for ascertaining and complying with such restrictions. To the extent this content makes reference to a fund, the Fund may not be publicly offered in any Latin American country, without previous registration of such fund´s securities in compliance with the laws of the corresponding jurisdiction. Public offering of any security, including the shares of the Fund, without previous registration at Brazilian Securities and Exchange Commission–CVM is completely prohibited. Some products or services contained herein might not be currently provided by the Brazilian and Mexican platforms.

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