Everything You Need to Know About the New Stimulus Bill

New Stimulus Checks & PPP 2.0! Everything You Need to Know About the New Stimulus Bill

It’s easy to forget, with everything happening in Washington D.C. in the last week, that we have a new stimulus package.  After sitting on the bill for about a week, President Trump signed the Consolidated Appropriations Act into law in the late hours of December 27th.

It was a massive bill, with many sections other coronavirus related stimulus.  I haven’t read the entire Act, and hope that I never do.  I have read the sections related to stimulus checks, the paycheck protection program and a few others though, as they relate directly to many of our clients.

This post will cover what you need to know about those sections: whether you’re entitled to a stimulus check and/or PPP loan, when you might receive one, and other relevant details.

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Episode 59: Everything You Need to Know About Buying & Selling Small Businesses With Greg K Williams

Episode #57: A Breakdown of the New Stimulus Bill, Including PPP 2.0!


 

A couple of days ago, President Trump signed into law a second stimulus package for COVID relief. This legislation includes $600 stimulus checks, more funding for the Paycheck Protection Program, along with some updates to the rules, changes to the regulations related to loan forgiveness, tax deferrals, healthcare, and more. Throughout the episode, Grant dives into what these new updates are, how they relate to individuals, business owners, employees, and how you can take advantage of the provisions in the new stimulus package.Continue reading

Episode 59: Everything You Need to Know About Buying & Selling Small Businesses With Greg K Williams

Episode #52: Top Year End Tax Planning Moves with Biden in the White House


 

After weeks of delay caused by legal battles surrounding the election, at this point, all signs point to the fact that Joe Biden will be inaugurated as the President of the United States of America. As we discussed in detail in a previous episode, Joe Biden’s tax plan contains tax reforms that affect taxpayers in numerous ways. In today’s episode, Grant dives into some of the tax planning opportunities you should consider in the coming months.Continue reading

How & Why to Open a Roth IRA For Your Kids

How & Why to Open a Roth IRA For Your Kids

One thing all parents have in common is wanting what’s best for their kids.  We all want to give our kids ample opportunities for success.  We all want to keep them rooted in family values.  And we all want them to have a fair shot at life.

When it comes to money, we typically want to give our kids ample support without spoiling them too much.  Most of us don’t want our kids to win the lottery, though.  We’d much rather our kids build some character through struggle and sweat equity.  Nothing gives young people an appreciation for higher education than working a few arduous, low paying jobs.

From a financial perspective it’s difficult balancing these objectives.  How do I help my kids financially without spoiling them?  How do I teach them fiscal responsibility?  How can I show them the power of long term tax advantaged compounding?

These a few questions our clients at the financial planning firm often ask.  The answer is often the Roth IRA.

This post covers why that’s the case, how you can set one up for your kids, and when & how to contribute to one.

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How & Why Asset Classes Compete With Each Other

How & Why Asset Classes Compete With Each Other

Diversification is one of the first things most people learn about investing.  The phrase “don’t put all your eggs in one basket” probably sounds familiar.

At its core, diversification means that when we build a portfolio we want to dump in a bunch of different investments with different risk profiles.  That way they’re not all likely to fall in value at the same time.  They work “together” to reduce risk.

Think of it like baking a cake.  Dumping a bunch of flour in a cake pan and tossing it in the oven probably won’t turn out very good.  But when you add sugar, milk, and eggs in the proper ratio, you’re a lot more likely to get a desirable result.

Typically, investors accomplish this by investing in two primary assets classes: stocks and bonds.  Stocks and bonds are very different animals, which is really the whole point.  In most circumstances one goes up when the other tends to go down, and vice versa.

There’s an interesting phenomenon that’s often overlooked when we view our investments this way though.  While we like to think that stocks and bonds “work together” to reduce risk, they actually compete against each other in the capital markets.  This behavior is a major reason we’ve seen such strong equity returns over the last few years, and will likely help to explain what kind of returns we see over the next 5-10 years & beyond.

This post will dive into this concept, what’s currently driving stock prices, and what’s likely to happen next.

Checking In On Market Valuations

Long term real S&P Composite price index vs. earnings. Source: Robert Shiller’s Online Database: http://www.econ.yale.edu/~shiller/data.htm

 

Checking In On Market Valuations

Long term CAPE vs. long term U.S. interest rates. Source: Robert Shiller’s Online Database: http://www.econ.yale.edu/~shiller/data.htm

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Your Business Is An Investment

Your Business is an Investment

Quick anecdote to kick off today’s post.

In a small town in the midwest there are two plumbers: Jim and Jason.  Both are 50 years old, and both are married with two kids who will someday go to college.

Jim and Jason are both great at their trade.  They are available when needed, charge a fair price for stellar work, and are well liked in the community.  They have the exact same number of customers in any given year, and both produce the exact same amount of revenue.

Their interest in building their respective businesses is where they differ.  Not from a revenue or growth standpoint, but from an operational standpoint.  Hiring & training support staff and new plumbers.  Systematizing and building process efficiencies.  Jim is hell bent on streamlining his business in an attempt to organize & simplify his work.  Jason is uninterested – he cares more about the customers and the work, and doesn’t mind when his professional world is hectic.

Now let’s fast forward 15 years.  Jim and Jason have brought in the exact same amount of revenue over the last 15 years.  But Jim has been far more efficient with how that revenue has been distributed.  He has systems, procedures, and operations built out to where his only duty is jumping in the car and driving out to see his customers.  Because of that he’s been free to spend more time with his family, and has packaged his business in a way that’s attractive to buyers.  He could sell to his employees or another party, and reap the value of the enterprise value he’s built.  The funds will contribute to his lifestyle in retirement.

Jason is ready to retire, but hasn’t been able to squirrel enough funds away to stop working.  He’s not been able to delegate much of his work to employees, and has virtually no systems or processes in place.  He realizes that in order for someone else to take over his business they would need to spend time – at least a year – working side by side to understand how he has everything set up.  Jason’s had to work twice as hard to produce the same revenue as Jim.  He’s enjoyed far less time with his family and his health has suffered.

It’s not surprising that a tightly run business creates more value.  What is surprising to many small business owners is the fact that failing to tighten up operations could be the difference between capitalizing on years of hard work by selling versus walking away with nothing.

Which gets us to the point of today’s post: your business is an investment.

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How to Get Your PPP Loan Forgiven

How to Get Your PPP Loan Forgiven

We’re now about six weeks into the CARES Act and in round two of the Paycheck Protection Program.  The $310 billion allotted to the program in round two is beginning to dwindle, but has lasted longer than most bankers expected.

There could be another round of stimulus that replenishes the program over the next few months, of course.  There seems to be widespread effort in Washington to ensure that businesses that need PPP funds are able to get them.  Who knows whether that will eventually happen.

For many of the businesses the most pressing question is no longer how they can access the program & obtain funds to keep their operations going.  It’s what must I do to have this loan forgiven?  This post will cover what we know so far.

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The CARES Act Revisited

The CARES Act Revisited: Updates to the Paycheck Protection Provision

A lot has happened in the past week.  And now that we’ve had an opportunity to read through more details of the Paycheck Protection Provision, it’s become clear that the program’s rollout will be messy.  In fact, it already is.

Last week I wrote a post outlining a few of the provisions in the CARES Act meant to provide economic relief to small businesses.  What we’ve come to realize in the last few days is that the Treasury Department has a great deal of latitude in how these programs will actually be offered.

For example, the permits the Treasury Department to issue up to $349 billion of loans to small businesses through the Paycheck Protection Program.  Businesses with fewer than 500 employees can apply through an SBA approved lender for loans up to either 2.5x their average monthly payroll over the previous year, or $10 million (whichever is less).  The bill stipulates that the pay back period for the loans may be stretched out to up to 10 years, with an interest rate no higher than 4%.

Then, early last week, the Treasury Department stepped in and communicated that all loans will have a two year amortization period and 0.5% interest rate.  And on Thursday, Secretary Mnuchin announced another interest rate revision to 1%.

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Unpacking the Coronavirus Stimulus Bill

Unpacking the Coronavirus Stimulus Bill

As you may have heard, the Coronavirus stimulus bill was signed into law by president Trump last week.  The package is called the CARES Act, and provides over $2 trillion of economic stimulus across a variety of channels.

My first thought here is sheer size of the package.  $2 trillion is a TON of money.  While at some point I’ll look into how the package will be paid for, I’ve spent more of my energy recently learning what’s in it.  The bill includes a mix of forgivable loans to small businesses, bailouts to corporations in certain industries, and checks mailed directly to taxpayers falling under a certain amount of adjusted gross income.

For many of our clients at Three Oaks Capital, there is urgency surrounding the relief opportunities for small businesses.  This post will cover the four sections I think are most relevant.  I’ll circle back and try to cover implications and opportunities for individuals in a subsequent post.

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