More On Tax Planningfrom The Advisor's Professional Library
- Precious Metal Taxation Precious metals can be used to better diversify a portfolio but can be volatile. The tax implications of investing in these types of assets vary depending upon the situation.
- Annuities: Variable Annuities Annuities are hot. The tax rules vary with the circumstances. Advisors must be aware of these intricacies when discussing annuities with clients.
In a standing room only conversation that finished day one of the Schwab Impact 2012 conference in Chicago on Wednesday, Maria Bartiromo sat down with Chuck Schwab, Scott Nuttall and George Roberts of KKR. The three men took questions from Bartiromo and the audience of advisors, traded stories of their storied careers and discussed the investment opportunities they see even in these volatile times.
Schwab was clearly the star, and the founder and chairman of Charles Schwab & Co. spoke in his trademark blunt way about the role of alternative investments in his own portfolio, the likelihood that we will go over the fiscal cliff and why he’s ready to write a “bigger check” in taxes to help address the nation’s fiscal woes.
First, Schwab revealed that in his personal portfolio, he holds 15% to 20% in alternative investments, and that he likes the opportunities presented by private credit investment vehicles (which KKR offers) particularly now that the banks are not providing much in the way of financing to businesses.
When Bartiromo asked the panel how the audience of advisors can help get investors back into the markets, Schwab said the key was that “you have to have stability.” Having faced such serious “cyclical events over the past 10 years,” driven partly by “the Wall Street firms getting so over-leveraged,” Schwab said that one of the benefits of the Dodd-Frank Act was that it might well help provide “some stability” to the markets.
As for the coming fiscal cliff, Schwab said he believed there was a “high probability” that we’d go over the cliff, with resolution not coming until some time in the spring, but he made it clear that he personally would have no problem if that resolution included higher taxes “for people like me.”
In fact, while Schwab thinks there’s a “high probability” that market volatility will continue, he noted that over the past 50 years of his investing life he’s “made money” in volatile times, and also done so in higher tax times.
“There are still opportunities to make money” in the markets going forward, particularly in energy, he suggested, further counseling advisors that “we shouldn’t be too depressed over the next few weeks or the next four years. We can live with this; I remain optimistic.”
And how will the markets react to higher taxes? “It will take one day” for the markets to adjust to higher taxes, Schwab said, and suggested that while “people like me will be writing a bigger check,” he was eager to do so if “we can then go back to making money.”
Check out complete coverage of Schwab Impact 2012 at AdvisorOne, including: