Let’s talk about something not-so-fun, but super important: Capital Gains Tax when you sell your home. Listen, I get it. Taxes are about as exciting as a fiber cookie - not a treat, but good for you. Still, if you're planning to sell your home, or even thinking about it in the next few years, this is something you should know. Often, this conversation only comes up when something big (and usually emotional) happens - retirement, divorce, the death of a spouse - and that’s what makes it even more important to get ahead of. The Capital Gains Exemption on Your Primary Residence Here’s the basic rule: when you sell your primary residence, you can exclude up to $250,000  of the gain if you’re single, or $500,000  if you’re married and filing jointly. That’s the IRS being generous - or at least reasonable. To qualify, two things need to be true: You’ve owned the home and lived in it as your primary residence for at least two of the past five years . You track your basis  - that’s your original purchase price, plus investments in the property (does not include regular maintenance). Let’s Walk Through a Basic Example You and your husband bought your home for $35,000 back in 1975. Back then, your neighborhood was quiet and modest. Now? The area’s booming, and your house is worth $500,000. You didn’t do major renovations - just the usual stuff like a new roof, paint, furnace, and carpet. So, for the most part, it’s the same house. At first glance, you might say, "Holy hell, look at that growth! Owning a house really is a great investment."  But slow your roll - that’s about a 5.5% compounded return per year, not even factoring the cost of taxes, insurance, repairs, or utilities. If you did, it'd be closer to 3%. Still good, but let’s not act like its magic money. Alright, so you bought the house in 1975 and now it’s 2025, and you’re ready to sell and move to a beautiful condo on the Gulf Shores of Alabama. Scenario 1: You're Happily Married, Both Alive Easy math here: Selling Price:  $500,000 Purchase Price (Basis):  $35,000 Exemption:  $250,000 (you) + $250,000 (husband) = $500,000 Result:  $500,000 - $35,000 - $500,000 = $0 taxable gain You walk away clean. No capital gains tax. Nice. Scenario 2: You’re Divorced An unfortunate reality of life and marries is divorce. So, let’s say you got divorced when the house was worth $350,000, and you kept it by buying out your ex-husband's half - $175,000. Your new basis (your cost) is: $17,500 (your original half) + $175,000 (buyout) = $192,500 So now: $500,000 (selling price) - $192,500 (adjusted basis) = $307,500  gain Subtract your $250,000 exemption = $57,500 taxable Capital gains tax at 20%, you could end up with a capital gains bill that's about $11,500. Not devastating, but definitely worth knowing in advance. Scenario 3: You’re Widowed Now let’s talk about something harder - you’ve lost your spouse. There’s a special exception called the Survivor Rule  you should know about. If you sell the home within 2 years  of your spouse passing away, you can still claim the full $500,000  exemption. Within 2 Years: $500,000 - $35,000 - $500,000 = $0 taxable After 2 Years: Now it’s trickier. Say your spouse’s half stepped up in value when they passed (common in community property states): $17,500 (your half of original basis) + $175,000 (his stepped-up basis [$350,000/2]) = $192,500 adjusted basis Now: $500,000 - $192,500 - $250,000 = $57,500 taxable Again at 20% capital gains tax, you might owe about $11,500. That two-year window makes a real difference. So... When Should You Sell? That’s the million-dollar question, right? Whether you’re thinking about moving for health reasons, downsizing, or dealing with a major life change, the timing matters. But more than that — your readiness  matters. Are you emotionally ready to leave the home? Are you financially ready to handle the taxes and transition? Are you prepared for what comes next? There’s no “right” answer in finance. There’s just what you’re comfortable living with. It’s all about the impact  a decision will have on your life — financially, emotionally, and even spiritually sometimes. So, if you're thinking about selling, let’s have a conversation. Not just about the numbers, but about you  — where you’re at in life, and what you want from the next chapter. Because your house might be just a house — but the decision to sell it is never just a transaction. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The author may hold positions in any securities discussed in this blog. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational, entertainment, and educational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

Well...with the Great Tariff Scare behind us (for now), I'm noticing more folks reconsidering the importance of managing risk in their portfolios. Not surprising. We may have dodged the tariff bullet for now, but market volatility still exists. So, is managing risk suddenly sexy again??...No... but frankly, it's overdue. The bull market of the 2010s and the steep recovery after COVID made people a little too comfortable with investment risk. Sure, it's appealing to chase returns of 9% or 10%, but with that kind of return potential, you better be ready for a -20% or more potential drawdown in any given year. When it comes to managing investments, I strongly believe in steady, dependable progress. This comes with a primary objective of maintaining manageable ups and downs rather than taking risks that might lead to those significant setbacks. But how exactly do we - as client and advisor - handle risk in a way that actually makes sense? It starts with genuinely understanding your risk tolerance. There are different ways of doing this - I've even heard of advisor asking, "how fast do you like to drive?" as method to gauge risk tolerance. This is total garbage. Your financial future deserves better. If your advisor still relies on superficial methods like these, you might want to reconsider who you're trusting with your hard-earned savings. Real risk tolerance means honestly assessing how much investment risk you can genuinely endure. Advisors typically approach this in two ways: Historical Crash Simulations:  Sometimes you'll see how your portfolio would have fared during the Great Recession. But, honestly, imagining a 30% - 50% loss doesn't usually help - it mostly just scares people into avoiding investing altogether. Comprehensive Stress Testing:  A better approach is to examine how your portfolio performs through various scenarios, from the Dotcom bubble to the bull market of the 2010s, and even the recent inflation spikes, and interest rate hikes. This method gives you a clearer, more realistic view of your comfort with different market conditions. For those who like a deeper dive, we'll explore metrics such as the Sharpe Ratio, Treynor Ratio, Standard Deviation, and Beta. These aren't just technical jargon - they're tools to measure precisely how your investments balance risk and reward. Another critical aspect to consider is the very real financial risk you're taking by avoiding investment risk entirely. While playing it safe might feel reassuring, being too safe could mean being unable to have the retirement lifestyle you envisioned, possibly going back to work, and even potentially running out of savings entirely. We call this "Retirement Failure" and is something far too common among farmers who sell for their retirement. Ultimately, investing involves accepting that risk comes in two forms: potential short-term volatility through market investments or avoid market investments and run the risk of falling short of your long-term goals or not living up to the expectation. The key question is: are you more comfortable riding out some market fluctuations in pursuit of growth, or would you rather avoid market stress, even if it means risking your future financial security? Given the recent market ups and downs, now is the ideal moment to revisit your risk tolerance. Let's talk openly and honestly about your real comfort level and find a strategy that genuinely aligns with your financial aspirations. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

To My Clients, You’ve probably noticed the after-hours craziness in the stock market related to tariffs. Heading into the election, markets were optimistic, reflecting strong returns. Yet, now markets seem overly negative, despite corporate earnings remaining high, consumer spending staying solid, and household savings still robust. What's changed? Right now, the main issue is uncertainty. You may have heard me say before: markets react mainly to two things - corporate earnings and surprises. Currently, investors and businesses aren't clear on what to expect. Businesses just want clear rules so they can plan, protect, invest, and grow reliably. When uncertainty prevails, it’s hard for investors and businesses to stay confident. On what President Trump has labeled "Liberation Day," tariffs officially kicked in, and the market reaction has been severe. After-hours trading saw sharp drops: the S&P 500 down nearly 3%, NASDAQ down 4%, and the Dow down 2% (as of this writing). While the President campaigned promising an "Economic Golden Age" AND tariffs, the market seemed to underestimate how disruptive tariffs could actually be. More than tariffs themselves, it’s the inconsistent messaging that's driving confusion and volatility. Despite the current stress, I remain cautiously optimistic - and here's why: 1. Tariff Fairness: Previously, the tariffs other countries placed on the U.S. were higher than what we imposed in return. Now, that imbalance is shrinking, leveling the playing field. 2. Consistency Brings Stability: If the administration maintains clear and consistent messaging, markets can adapt and stabilize. Corporate earnings are strong; the missing piece is predictability. 3. Self-inflicted Pain Can Heal: The turmoil we're experiencing now is largely self-induced, like touching a hot stove. This pain can quickly ease - provided political pride doesn't delay needed adjustments and cause deeper harm. To be clear, I haven’t always agreed with every policy or approach of any administration, past or present. However, I genuinely hope the administration succeeds in their plan of bringing manufacturing back to America, lowering the cost of imported goods, reducing taxes, and improving the standard of living for all Americans. It can be hard to see the plan or the sense but sometimes we just need to trust it’ll work out. But the real question remains: How long will our hand stay on the hot stove? Here's the good news for you, my clients: most of you hold moderate to conservative investment portfolios. This means you have significant investments in bonds and fixed income. While stocks face volatility, bond markets remain stable and even positive right now - doing exactly what they’re designed to do (unlike in 2022). My key advice today: Don't let scary headlines steal your happiness. If you're feeling anxious or uncertain, let's review your plan and investments together to make informed, rational decisions. Don't let the evening news derail the careful planning we've put into place. Stay confident, stay informed, and let’s talk soon if you have concerns. Regards, Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

With markets bouncing around and headlines in full panic mode, it’s no surprise some people eyeing retirement are second-guessing their timing. Totally normal. What you’re bumping into is called "sequence of return risk" - the risk of retiring (or needing to start pulling money) right when the market decides to act up. But should soon-to-be retirees be worried? Kind of... but not really. First, if you’ve worked with a good advisor, this kind of thing should already be baked into your plan. The timing, the withdrawals, the market dips - it’s all part of what gets modeled before you ever pull the retirement trigger. Second, a lot of retirement plan dollars these days are invested in target date funds. Cerulli Associates expects that by 2027, 66% of all retirement plan contributions will flow into target date funds [1]. These funds automatically adjust your investments based on your age - more aggressive when you're younger, more conservative as you near retirement. So why does this matter? Because despite the S&P 500 (SPY) being down around -5.6% year-to-date [2], many 2025 target date funds are actually up. The Fidelity Freedom 2025 Fund (FFTWX) is up 1.39% [3], Vanguard’s 2025 Target Retirement Fund (VTTVX) is up 0.59% [4], and Schwab’s 2025 Target Fund (SWHRX) is up 0.63% [5]. If you’re just going off the morning or evening news, you’d think everything’s on fire. But real-life investment results - especially in well-structured portfolios - tell a different story. There’s a lot of noise out there. But the right planning, the right investments, and the right context can keep you focused when the headlines don’t. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies I do not own any of the investments discussed in this article. Data is accurate as of the time of the writing. [1] Franck, Thomas. “Target-Date Funds, the Most Popular 401(k) Plan Investment, Don’t Work for Everyone.” NBC Chicago , March 11, 2024. https://www.nbcchicago.com/news/business/money-report/target-date-funds-the-most-popular-401k-plan-investment-dont-work-for-everyone/3639009/. [2] "SPDR S&P 500 ETF Trust (SPY)." Yahoo Finance . Accessed March 31, 2025. https://finance.yahoo.com/quote/SPY/. [3] "Fidelity Freedom 2025 Fund (FFTWX)." Yahoo Finance . Accessed March 31, 2025. https://finance.yahoo.com/quote/FFTWX/. [4] "Vanguard Target Retirement 2025 Fund (VTTVX)." Yahoo Finance . Accessed March 31, 2025. https://finance.yahoo.com/quote/VTTVX/. [5] "Schwab Target 2025 Fund (SWHRX)." Yahoo Finance . Accessed March 31, 2025. https://finance.yahoo.com/quote/SWHRX/. The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

After the recent election, investor confidence rose sharply - this was reflected in stock prices. The markets were excited about fewer regulations, reduced government spending, and promises of renewed economic growth. However, in recent weeks, the stock market has experienced significant volatility, dropping near correction levels (-10%). So, what's behind this sudden instability? Markets typically react to two main factors: corporate earnings and surprises. Interestingly, the president's campaign clearly outlined his plans, including significant cuts to government spending, increased deportations, and tariffs of up to 60% on trade partners. Despite these promises being well-known, they seem to be at the root of the current market turbulence. I believe the core issue causing today's market uncertainty is the president’s shifting stance on tariffs that could subside with a clear message. This week tariffs are active, suspended the next, only to return again soon after. Although the tariffs actually implemented were less than half of those initially proposed, this inconsistency creates uncertainty and surprise. Given the speed of information and digital access to our investments, that uncertainty and surprise are reflected instantly in market prices. Leading up to the election, many investors and business leaders probably focused too much on positive expectations, like reduced regulations and promises of economic growth. They overlooked the very real negatives associated with the president’s promises. Those negative factors are now becoming clear, and investors aren't thrilled with the outcome, despite the president’s promise of this being an economy "in transition" and economic prosperity just over the horizon. It seems that many who were initially thrilled with the election outcome are now experiencing some buyer’s remorse. Whether or not you agree with the president's actions, this isn't meant as praise or condemnation. What's clear, however, is that he's delivering on the promises the American people voted for in November. Ultimately, four years will come and go, and I firmly believe presidential action tend to have temporary impacts. However, if current market fluctuations make you anxious, it might be time to review your financial plan. Sometimes an adjustment can help; other times, staying the course is wiser. Either way, let's talk about it. Don't let market volatility rob you of your peace. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

Social Security is often misunderstood, especially when it comes to taxes. Let’s break it down simply: Your Social Security can be taxable at 0%, 50%, or up to 85%. But hold on—this doesn't mean you're actually paying a tax rate of 85%. It means that portion of your benefit could be subject to taxation at your ordinary income tax rate. When Social Security began, it was never meant to fully cover retirement costs. Instead, it was created as a safety net, supplementing your personal savings and investments accumulated during your working years and co-care provided by family members. Yet today, about 40% of American retirees rely entirely on Social Security for their retirement income [1]. We've all seen the quotes highlighting why investing on your own matters: "Someone who consistently invested even a modest portion of their paycheck privately throughout their career could retire with significantly more wealth—and financial security—than relying on Social Security alone." There's some truth to that, although these quotes typically overestimate returns and assume perfect consistency and contribution levels. But even so, should Social Security be taxed? I don't really believe so. The most a retiree can earn at full retirement age is about $4,000 per month. That's an investment equivalent value of roughly $1,500,000*. To me, that seems achievable since you need to make about $176,000 per year to reach the highest Social Security payout level [2]. Given this significant level of discount, it doesn't necessarily sit well with me that we tax Social Security benefits—but hey, here we are. Ultimately, as we come to the end of tax season, don't forget: While Wisconsin doesn't tax your Social Security payments, the federal government certainly does, and the thresholds are fairly low. Combining this income with retirement account income, earnings on savings/CDs, and other income like farmland rent can add up quickly. If you feel you're paying too much in tax, this time of year is the perfect time to review your tax returns and optimize your tax strategy. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies * Assumption based on a 4% annual distribution rate, "The 4% Rule" Bond, Tyler, Joelle Saad-Lessler, and Christian E. Weller. "New Report: 40% of Older Americans Rely Solely on Social Security for Retirement Income." National Institute on Retirement Security. January 14, 2020. https://www.nirsonline.org/2020/01/new-report-40-of-older-americans-rely-solely-on-social-security-for-retirement-income/. Social Security Administration. "What are the maximum Social Security retirement benefits payable?" Accessed March 17, 2025. https://www.ssa.gov/faqs/en/questions/KA-01897.html. The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.

If you've spent any time on the finance side of social media lately, you've probably seen countless charts reminding us that recessions, market corrections, and even bear markets (-20%) are part of normal market cycles. These posts typically urge investors to stay calm, reminding us that recessions and corrections are common, saying, "we've been here before." But let's be honest: today's worries aren't exactly the same as yesterday's. The current situation has its own unique complexities, making it completely understandable to feel uneasy about the markets and economy. It's perfectly okay to be worried. It's normal to feel anxious or even scared. Most importantly, it's essential—and healthy—to discuss these troubles openly with your financial advisor. When clients share their worries and concerns, they're placing a unique trust in their advisor. If an advisor immediately pulls out a chart and recites the standard lines about how "we've been here before," they're not truly listening. They're typically defaulting to what feels comfortable instead of addressing the real issues and questions you have. Here are some practical steps to consider during uncertain times: Meet with your advisor to express your concerns and create a clear action plan for different market scenarios—whether things worsen or start to improve. Review your financial plan and make it's on track. Get an opinion from your advisor, not just charts and numbers. Aim for mutual understanding and clarity—this helps with both the advisors understanding of you and you of your advisor. Eventually, this leads to better recommendations and a better relationship. Next time you encounter one of those posts, remember: it's okay to feel concerned...regardless of what the fancy charts say. Jose Alvarez Founding Advisor Harvest Horizon Wealth Strategies The information presented in this blog is the opinion of the author and does not reflect the views of any other person or entity unless specified. The information provided is believed to be reliable and obtained from reliable sources, but no liability is accepted for inaccuracies. The information provided is for informational purposes and should not be construed as advice. Advisory services are offered through Harvest Horizon Wealth Strategies LLC, an investment adviser registered with the state of Wisconsin.