Private credit continues to be in the news with badly overdone 2008 parallels being thrown around. Meantime, economists are upping their recession odds due to the war, and we look at how using ETF’s can improve your portfolio tax-efficiency and how to build a retirement spending plan. Looking locally, new data tells a story about how the Mass millionaires tax is or isn’t working and whether our local economy is about to get wrecked.
This Week’s Takeaways:
- ETFs are more tax-efficient than mutual funds and should be considered for your non-retirement accounts because their structure avoids triggering capital gains, allowing investors to defer taxes until they sell.
- People are talking their book with private credit. Beware the 2008 comparisons and understand that while return expectations have decreased, the people taking victory laps on the space now never foresaw these challenges. However, the investments are seeing their first redemption cycle so I’m sharing an article on how these semiliquid vehicles work so you can use them well.
- Economists, who generally have a poor track record of predicting recessions, have upped their recession odds recently. It’s important to understand the consensus since deviations from it move markets.
- Most retirement planning focuses on accumulation — not enough attention goes to how you’ll actually spend down your assets. The article below walks through a 6 step plan to help you arrive at a spending method that fits your situation.
- Our Boston Corner has new IRS data showing the impact of the Mass millionaires tax and an in-depth look on whether the Mass economy is about to get wrecked.
Why ETFs Win the Tax Battle Over Mutual Funds by Morningstar
ETFs are more tax-efficient than mutual funds because of their structure, which allows them to defer capital gains for their investors until they sell the actual ETF, whereas mutual fund investors pay taxes based on the trading activity necessary to run the fund.
Private credit’s wake up call by Axios
Private credit is in the news and this is the most balanced article I’ve seen so far. Return expectations are lower because the space got too hot, but the massive defaults and leverage we’d need to see to make the 2008 comparison justified just haven’t materialized.
See also: Private Credit Faces Its First Redemption Cycle: What Investors and Advisors Need to Know by Morningstar
Recession odds climb on Wall Street as economy shows cracks beneath the surface by CNBC
Recession expectations are rising as signs of economic weakening begin to show beneath still-resilient headline data. Slowing consumer activity, softer labor market trends, and tighter financial conditions are contributing to growing concern about future growth. While the economy hasn’t rolled over yet, the direction of underlying indicators suggests increased downside risk in the months ahead.
See also: We discuss how to best prepare yourself for a recession at the 15:44 market of last week’s Your Money This Week video.
How to Find Your Perfect Withdrawal Rate Strategy by Morningstar
Start by determining how much you need to withdraw based on your spending needs and time horizon, then assess how flexible you can be if markets don’t cooperate. Next, choose a withdrawal approach—such as a fixed percentage, guardrails, or required minimum distribution-style method—that aligns with your tolerance for income variability and risk. Finally, revisit and adjust the strategy over time, incorporating portfolio performance, inflation, and changing personal circumstances to keep the plan sustainable.
Book Recommendation
The Killer Angels: The Classic Novel of the Civil War by Michael Shaara
Another re-read, this is historical fiction at its finest. PULITZER PRIZE WINNER • NEW YORK TIMES BESTSELLER • The “remarkable” (Ken Burns), “utterly absorbing” (Forbes) Civil War classic that inspired the film Gettysburg, with more than three million copies in print—now in a 50th anniversary edition featuring a new introduction by Jeff Shaara
Boston Corner
Massachusetts Loses Billions in Income After Millionaire Tax by Bloomberg
Despite the headline, there’s new IRS data on the Mass Millionaire’s tax that offers evidence for both supporters and opponents of the tax. People have left the State, but revenue collection is up.
Is the Massachusetts Economy About to Get Wrecked? by Boston Magazine
Massachusetts’ economy remains supported by strong industries like healthcare, education, and technology, but signs of strain are emerging beneath the surface. Slower job growth, outmigration, and pressure on key sectors are raising concerns about longer-term competitiveness. The result is a mixed outlook—still relatively strong today, but facing structural challenges that could weigh on future growth.
