Personal Finance

Secrets investors need to know

Published

8 months ago

October 6, 2024

Business Finance News

Josh Brown

Photo: Duncan Hill

Josh Brown once had this idea that in order to be a financial advisor, you needed to be buttoned up and fit a particular mold.

Brown, a CNBC contributor who often takes a casual and accessible tack with investors for his commentary, has since learned that there’s more than meets the eye to a lot of things in the world of money.

Throughout his new book, “You Weren’t Supposed To See That: Secrets Every Investor Should Know,” Brown encourages investors to look beyond the surface level of financial advice you see in traditional and social media. Take the American Dream, for example:

“We all grow up being taught about the American Dream and why it can work for everyone,” said Brown, who is the CEO of Ritholtz Wealth Management, a New York City-based investment advisory firm. “I still believe that’s true, but what we learned in the pandemic is it can’t work for everyone all at once. That’s the thing that you weren’t supposed to see.

“The hidden truth about American-style capitalism is that if everybody is good all at once, the whole thing breaks down. We need people to be successful, but we also need people who are still striving to get there, who are willing to take jobs and do things that others won’t do.”

What we learned in the pandemic is it can’t work for everyone all at once.

Joshua Brown

CEO of Ritholtz Wealth Management, a New York City-based advisory firm

CNBC spoke with Brown in early October about his experience in the field as a financial advisor and some of his top takeaways for investors across generations.

This interview has been edited and condensed for clarity.

‘One of the biggest lies on Wall Street’

Ana Teresa Solá: What led you to write this book?

Joshua Brown: I had been writing a blog [The Reformed Broker] for about 15 years, and I was writing seven days a week at one point. Then the momentum started to slow down as my career took over.

At the end of last year, I decided to put an end to it and just say, “This is as far as I could take this.” But I didn’t want to not give it the proper send off, because it was a huge part of my life.

When you put your heart and soul into that much writing over that length of time, you kind of want to say, “All right … these are the most important insights, and these are the things that I think were important at the time. And let me do something that recognizes that.”

I wanted to collect all those insights in a book, revisit some of the greatest hits, and then bring them up to the present so that there is a value to the reader today.

ATS: You echo this idea throughout the book, that you can’t reap the rewards of the stock market without some impact.

JB: One of the biggest lies on Wall Street is that investors can avoid risk and still have the upside of whatever asset class, the markets, etc. It will always be the biggest lie because it’s the easiest thing on earth to sell.

Everybody wants it, and even very intellectually secure people who understand logic will still fall for that.

When you’re a salesperson, one of the things you learn is to figure out who you’re talking to and what their buttons are, and then you push those buttons.

Josh Brown on the CNBC set at the New York Stock Exchange.

Photo: James Moock

The thing that we have done very well in our content as a firm, is we have pointed out the ways in which people are convinced to do one thing or the other, and how much human nature plays into that and why it’s really important to fight those instincts, whether it’s fear or greed, as the markets are unfolding.

You really don’t want to veer too far into one of those buckets. You want to be right down the middle. Take enough risk that you can make money, but not take so much risk that you’re about to get the knockout punch.

Josh Brown is out with a new book, 'You weren't supposed to see that'

Financial advice industry ‘has come a long way’

ATS: In the book, there’s a story about how you walked into this financial advisor’s office and her technique was not what you expected.

JB: That’s about more than 10 years ago, and it was a really eye-opening moment for me. Prior to that, I was very intimidated to make the transition from being a retail stockbroker to an investment advisor.

I had this idea in my head that all the people who were serving as investment advisors were like these serious, buttoned up professionals who knew exactly what to do — and it really turned out not to be that. It turned out to be a lot of people pretending.

The industry has come a long way since then. The average advisor is significantly better equipped to deal with clients and more professionalized than what I had seen in that era.

That’s kind of a relic of another time that no longer exists. I don’t think that you can fake it to the degree that you used to be able to. [Many advisors are] operating on a fiduciary standard, I don’t think you could fool people anymore.

Gen Z doesn’t need financial planning advice. They need asset allocation advice.

Joshua Brown

CEO of Ritholtz Wealth Management, a New York City-based advisory firm

ATS: You say young advisors are equipped with the expertise, but they lack something prior generations of advisors have. What is it?

JB: You have this new generation of incredibly qualified financial planning talent. They’re coming out of college knowing more at 23 than many advisors at 43 have ever learned about the planning process.

This is my opinion — I’m sure people [will] get mad when they hear this — but what they’re missing is the ability to convert an audience of prospective clients into real relationships.

They don’t yet have the life experience. Generationally, they’ve been able to get away with doing a lot less face-to-face. They haven’t dealt with as much rejection as Gen X, certainly the boomers.

Let’s put them in some rooms with important meetings going on. Let’s give them opportunities to have these face-to-face interactions, because they really know what they’re doing.

Where they’re lacking is what my generation and older has — which is the ability to sell, to persuade, to make people feel comfortable and the ability to deal with awkward social circumstances.

‘Gen Z doesn’t need financial planning advice’

ATS: What are you observing with Gen Z and how they’re seeking financial advice?

JB: Gen Z, they don’t need financial planning advice. They need asset allocation advice. They don’t have the assets accumulated. There are no estate issues. There aren’t really tax things worth discussing.

Whatever they’re encountering on TikTok is whatever the algorithm is serving them, and the algorithm is going to serve them the most outrageous content, it’s going to serve them shortcuts, facts, tricks, stories about people making wild, Bonanza size trades.

It’s not advice … Most of it is being delivered by completely unqualified people who are not registered, who are not beholden to any sort of standard, and could just say whatever they want.

But I think what ends up happening with that generation, just like every generation prior, is things in their life become more complex. The level of responsibility goes up, the amount of money that they’re dealing with goes up, and they will, in turn, start looking for help.

And they’ll start their search online.

Personal Finance

Deferred capital gains tax on mutual funds: Lawmakers pitch rule change

Published

4 hours ago

May 23, 2025

Business Finance News

Artistgndphotography | E+ | Getty Images

If you own mutual funds, year-end payouts can trigger a surprise tax bill — even when you haven’t sold the underlying investment. But some lawmakers want to change that.

Sen. John Cornyn, R-Texas, this week introduced a bill, known as the Generate Retirement Ownership Through Long-Term Holding, or GROWTH, Act. If enacted, the bill would defer reinvested mutual fund capital gains taxes until investors sell their shares.

Bipartisan House lawmakers introduced a similar bill in March.

Why mutual funds incur capital gains tax

When you own mutual funds in a pre-tax 401(k) or individual retirement account, growth is tax-deferred. But if you hold assets in a brokerage account, capital gains distributions and dividends incur yearly taxes.

Depending on performance, some mutual funds can spit off substantial gains during the fourth quarter. In 2024, some paid double-digit distributions, Morningstar estimated.

These payouts are subject to long-term capital gains taxes of 0%, 15% or 20%, depending on your taxable income. Some higher earners also pay an extra 3.8% surcharge on investment earnings.

About $7 trillion of long-term mutual fund assets held outside of retirement accounts could be impacted by the legislation, according to the Investment Company Institute, which represents the asset management industry.

Bill would ‘provide parity’ for mutual funds

In a statement Wednesday, Cornyn described the mutual fund proposal as a “no-brainer” that would “help provide parity with other investment options.”

If enacted, the proposal would “incentivize Americans to save and invest for their long-term goals” without the stress of an “unexpected tax bill,” Eric Pan, president and CEO of the Investment Company Institute, said in a statement following the bill’s introduction.

However, it’s unclear whether the bill will advance amid competing priorities. Lawmakers are wrestling over President Donald Trump‘s multi-trillion-dollar tax and spending package, which passed in the House on Thursday, and could face hurdles in the Senate.

The U.S. Department of the Treasury has also asked Congress to raise the debt ceiling before August to avert a government shutdown.

Switch to exchange-traded funds

While deferring yearly taxes could benefit some investors, you could also make portfolio changes, financial experts say.

You can avoid mutual fund payouts by switching to similar exchange-traded funds, or ETFs, which typically disburse less income, Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, previously told CNBC.

Of course, the trade could also trigger taxes if the mutual fund has embedded gains, which may require some planning, he said.

Alternatively, investors could opt to keep mutual funds in tax-deferred accounts, such as pre-tax 401(k)s or IRAs.

House advances President Trump's tax & spending bill

Personal Finance

What Medicaid, SNAP cuts in House Republican bill mean for benefits

Published

6 hours ago

May 23, 2025

Business Finance News

A “Save Medicaid” sign is affixed to the podium for the House Democrats’ press event to oppose the Republicans’ budget on the House steps of the Capitol on Tuesday, February 25, 2024.

Bill Clark | Cq-roll Call, Inc. | Getty Images

The multitrillion-dollar tax and spending package passed by the House of Representatives on Thursday includes historic spending cuts to Medicaid health coverage and the Supplemental Nutrition Assistance Program, or SNAP.

Now, it is up to the Senate to consider the changes — and to perhaps propose its own.

As it stands, the legislation — called the “One Big Beautiful Bill Act” — would slash Medicaid spending by roughly $700 billion and SNAP, formerly known as food stamps, by about $300 billion.

“Bottom line is, a lot of people will lose benefits, including people who are entitled to these benefits and who are not the target population of this bill,” said Jennifer Wagner, director of Medicaid eligibility enrollment at the Center on Budget and Policy Priorities.

The cuts to Medicaid and SNAP — the largest in the programs’ histories — come as the reconciliation bill would add roughly $3 trillion to the nation’s debt including interest over the next decade, estimates the Committee for a Responsible Federal Budget.

To help pay for a variety of tax perks included in the bill, House Republicans have targeted Medicaid and SNAP for savings.

“We don’t want any waste, fraud or abuse,” President Donald Trump said Tuesday on Newsmax when asked about prospective Medicaid changes. “Other than that, we’re leaving it.”

Likewise, some Republican leaders have pointed to rooting out abuse of SNAP benefits.

One way House Republicans are seeking to curb the programs’ spending is through new work requirements.

New Medicaid work requirements to get earlier date

Under the House proposal, new Medicaid work requirements will apply to people who are covered through the Affordable Care Act expansion. To be eligible, those individuals will need to participate in qualifying activities for at least 80 hours per month unless they can prove they have an approved exemption, according to Jennifer Tolbert, deputy director of KFF’s Program on Medicaid and the Uninsured.

In last-minute negotiations, House Republicans moved the date for implementing those work requirements to no later than Dec. 31, 2026, up from a previously proposed effective date of Jan. 1, 2029 — around two years earlier than the original version, CBPP’s Wagner noted.

Notably, it also gives states permission to start implementing the work requirements earlier than that date.

“On the Medicaid side, the work requirement is arguably the harshest provision,” Wagner said. “It will lead to the greatest cuts of enrollment in Medicaid.”

Rep. Chip Roy on House tax bill: Hope the Senate addresses issues around deficit and Medicaid

The new accelerated timeline also doesn’t allow time for rulemaking, a process by which the public can submit comments, and the Centers for Medicare and Medicaid Services may respond to those submissions, Wagner noted. Instead, the legislative proposal calls for guidance to be issued by the end of 2025, which she said is a “big deal” because it eliminates the opportunity for adjustments to be made in response to public comments.

Moving up the effective date also limits the ability to conduct public outreach to notify individuals of the coming changes, said Tolbert of KFF. States will also have less time to adjust their systems to track whether individuals are working the required number of hours or engaging in other necessary activities, she said.

CMS Administrator Dr. Oz: Major goal in Medicaid is to align the federal government with the states

Within the work requirements, the House also moved to limit the discretion to determine other medical conditions that may make someone exempt that had been in the original version, Wagner said.

Notably, the proposal also calls for states to conduct more frequent eligibility redeterminations for adults who are eligible for Medicaid through Affordable Care Act expansions. Starting Dec. 31, 2026, states will be required to conduct redeterminations every six months, compared to current requirements that require eligibility reviews within 12 months of changes in a beneficiary’s circumstances, according to KFF.

The increased frequency of the redeterminations are “likely to have a big impact,” Tolbert said.

Ultimately, the work requirements may make it difficult for people to access the health coverage they need, she said.

“What this may end up doing is having the opposite of the intended effect,” Tolbert said. “They may lose access to the very treatments and services that are enabling them to work.”

SNAP work requirements would be expanded

Under the House Republican bill, work requirements would also be expanded for SNAP benefits.

Individuals ages 18 to 54 who have no dependents and are able to work are already face SNAP benefit limitations based on 80-hour per month work requirements.

The proposal would extend those requirements to individuals ages 55 to 64, as well as households with children, unless they are under age seven. In addition, states would also be limited in the flexibility they may provide with waivers of the work requirements or discretionary exemptions, according to the Urban Institute.

In addition, federal funding cuts would make it so states would have to contribute more toward benefits and administration of the program.

Ultimately, those changes could take away food assistance for millions, according to the Center on Budget and Policy Priorities.

Personal Finance

‘Big beautiful’ tax bill skipped ACA credits: How it affects insurance

Published

7 hours ago

May 23, 2025

Business Finance News

Senate Majority Leader Charles Schumer (D-NY) (R) talks with House Minority Leader Hakeem Jeffries (D-NY) while attend an event to mark the 14 anniversary of the passage of the Affordable Care Act at the U.S. Capitol on March 21, 2024 in Washington, DC.

Chip Somodevilla | Getty Images

The multitrillion-dollar tax and spending package House Republican passed on Thursday contains a multitude of changes that may affect consumers’ finances.

But the “One Big Beautiful Bill Act” is missing something health care advocates hoped to see: an extension of the premium tax credits under the enhanced Affordable Care Act that are set to expire at the end of the year. The credits’ absence is notable when the bill includes other proposed changes to the ACA marketplace, experts say.

The ACA’s enhanced premium credits help make health insurance policies through the marketplace more affordable. Eligible applicants can use the credit to lower insurance premium costs upfront or claim the tax break when filing their return.

Instead of a lower-income person paying 2% of their income on their premium, they pay nothing, according to KFF. Higher income people, who were originally ineligible for credits, currently pay no more than 8.5% of their income on their premium.

Without the extension, nearly all subsidized ACA enrollees can expect their monthly premiums to rise, said Cynthia Cox, vice president and director of the program on the ACA at KFF.

For example, a family of four making $85,000 would have to pay an additional $313 in premiums for coverage in 2026 and face a $900 increase in their out-of-pocket maximum, according to an April report by the Center on Budget and Policy Priorities.

“Pretty much everyone, almost everybody who’s buying their own health insurance, now would see their costs go up,” Cox said.

Here’s what to know if you buy health insurance through the federal marketplace.

Tax credits boosted ACA marketplace enrollment

The extended subsidies were passed via the American Rescue Plan Act during the pandemic, and covered plans in 2021 and 2022. The Inflation Reduction Act extended the benefit until the end of 2025.

The premium tax credits made health insurance purchased through the marketplace much more attractive and affordable for people, Cox said.

Since the extended tax credits have been in place, the enrollment in ACA marketplace grew from 12 million in 2021 to a record 24.2 million in 2025, according to a February report by the Commonwealth Fund.

But if the benefits expire, “we’re basically back to the same Affordable Care Act that existed the last time Trump was president,” Cox said.

Some consumers may lose eligibility

If premium tax credits aren’t extended, some people may see their costs rise high enough that they can’t afford coverage. Under the original version of the ACA, middle-income households were often priced out of the health care subsidies.

Latinos drive 'Affordable Care Act' marketplace enrollment

If we go back to earlier thresholds, those who earn more than four times the federal poverty level — $62,000 for an individual or $128,600 for a family of four with 2026 coverage — would lose eligibility for subsidies and would have to pay the full cost for their health plans, according to KFF.

Researchers at KFF anticipate that between the potential lapse of the credits coupled with the proposals, enrollment could shrink by one-third, leaving about 8 million uninsured in the U.S.

One change that is in the House GOP tax bill would make both the share of income that people pay for premiums after tax credits and the maximum out-of-pocket limit 4.5% higher in 2026 than they would have been without the rule, according to Gideon Lukens, senior fellow at the CBPP. He wrote a report in April about the ACA changes in the House proposal and the absence of the premium tax credits.

‘An issue of contention’

The premium tax benefits have been “an issue of contention” among lawmakers as Republicans have not indicated an interest in extending the enhanced premium credits any further, said Jonathan Burks, executive vice president of economic and health policy at the Bipartisan Policy Center.

Yet, there have been at least two GOP senators that are interested in extending the credits, KFF’s Cox said.

Sen. Lisa Murkowski, R-Alaska, has said she supports extending the enhanced subsidies to help people afford premiums. “I think we’re going to need to continue these premium tax credits,” Murkowski said in an interview with the Alaska Beacon in January.

Sen. Thom Tillis, R-N.C., also expressed interest in extending the premiums in an interview with AxiosPro in March.

Neither Murkowski nor Tillis responded to CNBC for comment.

It’s possible that the ACA premium tax credits could be addressed in a different piece of legislation later in the year, Cox said.

“But at least right now, that’s not in this bill that’s being debated right now,” she said.