Exploring the 8 Forms of Capital for a Resilient Future
In his insightful book, "Prosper!", Dr. Chris Martenson introduces a compelling framework centered around building resilience. According to Martenson, developing resilience is a key strategy to navigate a range of challenges, both man-made and natural, that could converge and potentially impede human prosperity.
Martenson identifies the 8 Forms of Capital as crucial components of this resilience-building approach:
Financial Capital
Social Capital
Material Capital
Living Capital
Emotional Capital
Knowledge Capital
Cultural Capital
Time Capital
In previous blog posts, we delved into Emotional Capital and Living Capital. Today, let's take a moment to focus on Financial Capital.
As we reflect on the recent US Thanksgiving and approach the year-end, it's a pivotal time in personal finance. Households are contemplating tasks such as organizing the financial records of their small businesses, converting Traditional IRA dollars into Roth IRA accounts, choosing benefit packages during open enrollment, and engaging in tax loss harvesting on under-performing investments.
A quick reminder: Roth IRA conversions need to be completed before the end of the calendar year, while 2023 IRA contributions can be made until the tax filing deadline, typically April 15, 2024.
If you require assistance with your Roth IRA conversion strategy, feel free to reach out via our contact page. I recently shared a thread on X.com (formerly Twitter) exploring a Roth IRA conversion example.
For those with employers offering group term life (GTL) insurance, consider selecting a policy with a death benefit aligned with household debt levels. Opting to pay GTL policy premiums with after-tax dollars ensures that the death benefit is tax-free when passed on to heirs. The same is true of electing long-term care benefits: Premiums paid with after tax dollars can result in tax free benefits if they are ever needed.
In light of negative performances in bonds and certain commodity funds in 2023, consider selling net loss positions in taxable accounts. Replace them with non-identical funds to avoid IRS wash sale rules. The resulting capital loss can be applied to offset future capital gains without limitations and can also be used against other types of income to a limited extent. This strategic move allows you to participate in the market's recovery while enjoying present and future tax reduction benefits.
Wishing everyone a Happy Thanksgiving! Stay tuned for my year-end post, where I'll share some of my latest insights on asset markets and provide personal updates.
