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May is National Mental Health Awareness Month, and in that spirit, we’d like to take a look at the influence of money on our own well-being. Much of the recent discourse surrounding mental health has been about healthy vs unhealthy relationships, how to distinguish between the two, and how to improve them going forward. While these discussions usually center around interpersonal relationships, it’s important to also consider the health of our relationship with money. Whether we like it or not, finances play a huge role in our everyday lives, and having an unhealthy relationship with money can have an outsized effect on one’s happiness. Here are 7 ways to have a healthier relationship with your money: 1. Have a long-term view Financial markets are volatile by nature, and inherently unpredictable. There always exists a risk of negative performance in a day, month, or year. Despite what some may say, no one can know what the next day will bring. Consider this: the most impactful event on financial markets in the last decade was the COVID-19 pandemic. How many of us saw that coming? With that said, the longer the timeframe we examine, the safer some assumptions become. It’s entirely possible, likely even, that sometime in our lives there will be another black swan event which causes the market to decline; however, we also have a bevy of historical evidence that the long-term trend of markets is positive, despite these negative events. The Russell 3000, an index that benchmarks the entire U.S. stock market, has an average yearly return of about 8.3% since 1990, despite the Dotcom Bubble, Global Financial Crisis, and COVID-19 pandemic all happening during that timeframe. While it can be scary to see your portfolio shrink during a downturn, it’s only permanent if you are forced to sell when the market is at a low point. Investing for the long-term and only exposing long-term assets to market risk will help prevent a forced sale. That, in turn, will grant you some peace during future market downturns, knowing that your portfolio is designed to weather such events. 2. Don’t fixate on the headlines Once you and your advisor have crafted an appropriate portfolio, you can take the next big step in improving your relationship with money: turning the TV off! Financial news is ultimately an entertainment business; while forces that drive market returns like interest rates, inflation, and earnings are important to know, they can also be a little… boring. On the other hand, bold predictions and existential threats make for great television, and emotionally written pieces drive online engagement. Because of this, headlines tend to be disproportionally dramatic and negative. The next time you find yourself having an emotional reaction to a story, consider whether the piece is truly meant to inform, or if it’s purposefully composed in a way that elicits emotional reaction. To be fair, there are plenty of financial journalists doing important, accurate reporting, but it can be difficult to cut through the noise. A great place to start is with LTWM’s quarterly market commentary, written by our Chief Investment Officer Tim Sallade. 3. Keep your goals in mind One potential barrier to saving is the ambiguity that is often attached. The things we want to buy are right in front of us, tangible and concrete, with benefits that are easy to imagine. On the other hand, saving for savings sake can feel vague and undefined. We all know it’s what we’re supposed to do, but it can be hard follow through without clarity surrounding what you’re saving for. Try to set specific goals for your financial future and keep them in mind when making purchasing decisions.  It can be hard to forgo a purchase for the sake of “savings,” but it’s easier to do it for a down payment, your kid’s college, or an early retirement. Keeping your goals in focus can also provide emotional benefits when it comes time to accomplish them. It is common to feel guilt or stress about large purchases, even when we know we can afford them. When we embrace goals-based thinking and steer away from the false binary of good saving vs bad spending, we give ourselves permission to feel joy and accomplishment upon the realization of a financial goal. 4. Prepare to flip the switch from saving to spending Speaking of financial goals, don’t overlook the big one: retirement! After 30+ years of working and saving, it’s easy to get used to seeing your account balances rise. For most of us, retirement will mean seeing that number start to go down, and that’s ok! There’s a big difference between spending your savings and spending an unsustainable amount. Even with assurances that withdrawals are sustainable, it can be hard for some to transition to drawing down their savings. We spend our entire working lives thinking that saving is good, and spending is bad. New retirees can struggle with feelings of guilt and insecurity as they face the prospect of seeing their account balances decline. Try to get comfortable with the idea of spending your savings in retirement. Guilt can cause you to be overly conservative with your retirement spending, which robs you of the enjoyment you earned during your years working. Allow yourself to enjoy the fruits of your past diligence! If you are worried about your spending levels, a LTWM advisor can work with you to find a level of spending that is appropriate for your circumstances. 5. Reexamine your relationship with debt Many of us are taught that debt is inherently bad and should be avoided at all costs. While that kind of thinking is helpful when it comes to high-interest loans like credit card debt, it doesn’t capture the full picture. Not all debt is created equal, and debt with a reasonable interest rate can be a healthy tool in your financial plan. To be clear: it’s important to pay off credit cards each month, as well as make required monthly payments for student loans and mortgages. With that said, loans with lower interest rates shouldn’t necessarily be paid off as fast as possible. If your interest rate is lower than high-yield savings rates or expected long-term market returns, it’s probably beneficial to invest your extra cash instead of paying extra on your loan. Additionally, debt can be a tool to efficiently access your equity. HELOCs, Home Equity Loans, and Margin Loans can be useful tools to generate capital without selling assets or creating tax liabilities. Debt can feel suffocating for some, but distinguishing between healthy and unhealthy debt can help relieve your anxieties. Many healthy financial plans involve folks keeping their existing loans or even thinking about taking on new ones. If you have reasonable interest rates and are paying on time each month, you’re doing just fine. Give yourself some grace! 6. Be flexible Imagine being able to speak with your 18-year-old self and compare notes on their expectations versus your reality. Certainly, there would be things they predicted correctly, and goals that you’ve managed to accomplish. But your timeline is probably also rife with the unexpected, in good ways and bad. The future is impossible to predict, which means the only real guarantee is unpredictability. When it comes to your financial situation, expecting the unexpected is important. One key way to do this is to build an emergency fund with enough to cover 3-6 months of non-discretionary expenses. Building yourself some leeway will give you time to react to unexpected changes without immediate financial pressure. With that said, don’t only prepare for the negative. Go through the exercise of imagining what you would do with an unexpected windfall. Having a plan for an unexpected bonus can help you utilize that money in ways the are meaningful, and that you won’t regret in the future. Importantly, most of the big changes we see in our lives extend well beyond a financial loss or gain. Events like meeting a significant other, changing careers, or losing a loved one are important on levels greater than financial, and yet money is adjacent to all of them. Having a flexible financial mindset can help you overcome the fear of change and allow you to process your emotions before you have to consider financial impacts. 7. Talk to someone The theme for 2024’s Mental Health Awareness Month is “Where to Start,” with a mission statement of “For anyone struggling with the pressure of today's world, feeling alone, or wondering if they can feel better, this is Where to Start." If you are struggling with your relationship with money, a financial planner can help. They can help you better understand your financial situation, evaluate your relationship with money, and work towards a brighter future. Lake Tahoe Wealth Management advisors have decades of experience helping clients navigate their emotional connection to money. To get started, email info@laketahoewealthmanagement.com to set up a free consultation, where an advisor can help you better understand the help we provide. If you or a loved one need more information about mental health and available resources, Mental Health America’s website can be a good place to start. Interested in learning more about Mental Health Awareness Month? Visit the Mental Health Month homepage.

Executive Summary The first quarter was strong for stocks, building on a very strong fourth quarter of 2023. Most U.S. indices are at new all-time highs breaking the previous records from January 5th, 2022. The U.S. economy remains resilient despite the Federal Reserve efforts to cool it by keeping interest rates elevated. At its last meeting in March, the Fed left rates unchanged and the term “higher for longer” has dominated the recent news and is predicated on the following data points: The U.S. economy is strong and growing - growth expectations for 2024 increased to 2.0%, in part because of the continuation of solid consumer demand The U.S. labor market is healthy - the unemployment rate remains low and the four -week moving average of jobless claims has yet to break out of its low range. While we do see headlines of corporate job cuts, workers are finding new jobs quickly Inflation is lower, but at a slowing rate - Core inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, edged down to 2.8% year over year in January from 2.9% in December. The Fed target remains 2.0%. The other measure of inflation, the Consumer Price Index (CPI) results for January, February and March were all higher than expected, which has sent bond yields up across longer maturities The next Fed move is widely expected to be a rate cut and the first cut may be pushed out to the end of the year since the election is in November. The last rate hike was in July of 2023. The Federal government continues large deficit spending, which is making the Fed’s job harder to bring inflation down to the 2% target rate with its monetary policy. The European Central Bank and Bank of England are likely to start rate cuts ahead of the Federal Reserve, as current expectations are for the first cut in June. The unemployment rate is low in England and the Euro area; however, growth expectations are less than the U.S. economy and stock market valuations reflect it. Growth rates in emerging Asia and all of Latin America look robust but could easily change with any downturn in the more developed economies. We are cautious due to the high valuation of U.S. stocks but remain optimistic on the global job market and improved productivity from new technologies. We want to remind you we are watching all the developments closely, especially inflation, which is turning out to be more stubborn than expected. We look forward to our planning discussions for the new year and meeting with you, whether in person or virtually. For those who would like a deeper dive into the details, please continue reading… World Asset Class 1st Quarter 2024 Index Returns The first quarter was very positive for U.S. and International Developed stock index returns and most indices finished at new record highs. For the broad U.S. Stock Market, the first quarter return of 10.02% was well above the average quarterly return of 2.4% since January 2001. International Developed Stocks returned 5.59%, also well above the long-term average quarterly return of 1.6%. Emerging Market Stocks returned 2.37%, just below the average quarterly return of 2.5%. Global Real Estate Stocks were negative for Q1 and returned -1.19%, below the asset class’s average quarterly return of 2.2%. Bond yields increased in Q1 after the sharp decline in bond yields during the fourth quarter of last year. The U.S. Bond Market was down -0.78%, below its average quarterly return of 0.9%, while the Global Bond Market (ex U.S.) was up 0.58%, close to its average quarterly return of 0.9%. Here is a look at broad index returns over the past year and longer time periods (annualized): For the past year ending 3/31/2024, U.S. stocks led all broad categories with a positive return of 29.29%, International Developed stocks were up 15.29%, Emerging Markets stocks were up 8.15%, and Global Real Estate stocks were up 7.44%. The U.S. Bond Market gained 1.7% and Global Bonds were up 5.92% for the past year. Over the past five years, U.S. stocks were up 14.34% annually, while International Developed stocks were up 7.48% annually, Emerging Market stocks were up 2.22% annually, and Global Real Estate stocks were up 1.21% annually. The U.S. Bond Market was up 0.36% annually for the past five years, while Global Bonds were up 1.03% annually. It has been a difficult five-year period for bonds, due to the increase in interest rates across the yield curve. Over the past 10 years, the U.S. stock market (up 12.33% annually) is well ahead of International Developed (up 4.81% annually), Emerging Markets (EM) stocks (up 2.95% annually) and Global Real Estate stocks (up 3.89% annually). U.S. Bonds were up 1.54% and Global Bonds were up 2.64%, annually over the last 10 years. Taking a closer look within U.S. stocks during the first quarter, many asset classes had strong returns. At the bottom after two straight quarters as the leading asset class, is Small Cap Value, which was up only 2.9%, while Large Growth led all U.S. asset classes, up 11.41% for the first quarter of 2024. Large Cap stocks (up 10.3%) were above Marketwide results (up 10.02%). There was a noticeable shift back to large cap growth stocks during Q1 as investors increased the valuation of stocks associated with the concept of AI. We will have more to say about the “magnificent 7 stocks” at the end of the commentary. It is a challenge for small cap value stocks to perform well when the regional banking ETF, symbol KRE, struggles. During the first quarter, KRE was down 6%. Regional banks are challenged by higher interest rates and commercial real estate loans. We still believe almost all banks will make it through a period of higher default rates as lenders and borrowers negotiate new commercial mortgage loans. Small cap value stocks are also stuck in a strong correlation where they under perform when inflation data is higher than expected and outperform when inflation data is lower than expected. During the first quarter, inflation remained stubborn, especially the price of crude oil, which is a manipulated commodity, given the monopoly of supply by OPEC. If we extend our analysis of U.S. stocks over longer time periods, Large Growth stocks lead over the past year, up an amazing 39% vs. 20.27% for Large Value. Large Growth has been the top returning asset class over the past 5 and 10 years. It is worth noting that U.S. Market wide results for the past 10 years are robust, up 12.33% annually. The U.S. business cycle continues to slow, but there are signs that a bottom is in. The Conference Board Leading Economic Index, which consists of 12 leading economic indicators has ticked up in February for the first time in 2 years and is 26 months off from its previous peak. On average for the index, there is 10.6 months between a peak and a recession, so the current cycle is well past the average. The 4th quarter GDP growth final reading was revised up to 3.4%, which brings GDP growth for the full year 2023 up to 2.5%, well ahead of GDP growth for 2022 (full year), which was 1.9%. For 2024 GDP growth is expected to slow down to 1.5%, but that is up from consensus expectations of 0.8% growth last quarter. It is difficult to see a heavy recession with the job market still so strong; if you want a job, you can find it. The four-week moving average of initial claims for unemployment insurance remains near the lowest levels in the last year, which means the U.S. job market remains very tight; and until it falters, we are not likely to experience a recession in the near term. One reason why the jobs market is so strong is the robust fiscal spending, which is adding another $1 trillion to the national debt every 100 days. The pace of fiscal spending isn’t sustainable and is making the monetary policy of the Federal Reserve more difficult in its goal of fighting inflation. The Fed has paused from hiking rates but continues to sell Treasuries and mortgages at a monthly pace of just under $100 billion, which has the effect of increasing interest rates. Moving on to International Developed stocks, Growth Stocks were up 11.04% in local currency, but up only 6.91% in U.S. dollars, since the dollar appreciated against most foreign currencies during the first quarter. The Euro went from $1.10 last quarter to its current value of $1.08. It is still down from $1.18 per Euro, 2.5 years ago. The currency effect served as a strong headwind, hurting international stock returns during the quarter. The value premium (Value-Growth) was negative -2.7% (4.22% vs. 6.91%), and the size premium was negative -3% (Small Cap-Large Cap, 2.58% vs. 5.59%). Our investment funds are priced in U.S. dollars (unhedged) and benefit from a weakening U.S. dollar: Over longer time periods, the value premium (value-growth) is positive over the past 1 and 3-year period, but still negative for 5 and 10 years. The size factor premium (small cap-large cap) is negative in the quarter, 1-year, 3-year 5-year and 10-year periods, although just below large cap for the past 10 years (4.54% vs. 4.81%): Moving the commentary to fixed income, bond market returns around the world were positive during the first quarter, as yields increased for most bond maturities. The bond market is now predicting 2-3 interest rate cuts by the Federal Reserve in 2024, and the Fed’s QT (quantitative tightening) program of selling $90-100 billion of bonds per month is expected to continue for many years. The yield on the 5-year Treasury note increased by 37 basis points, ending the quarter at a yield of 4.21%, down from 3.84%. The yield on the 10-year Treasury note increased by 32 basis points, ending the quarter at a yield of 4.2%, up from 3.88%. And the 30-year Treasury bond yield increased by 31 bps to 4.34%, up from 4.03%. As yields increase, bond prices decrease, and higher borrowing costs make it more difficult for consumers and corporations to use debt, including auto loans and mortgages. Here is the U.S. yield curve, and you can see how yields increased for all maturities longer than 3 months (current yield curve in grey, one quarter ago in blue, and one year ago in green): Looking at fixed income asset classes, the highest first quarter bond return was for the U.S. High Yield Corporate Bond Index, up 1.47%, which is a sign of a robust economy, while the Government Bond Index Long (long-term Treasuries) was down at the bottom, -3.24%, since longer bonds lose more value than shorter maturity bonds when interest rate increase. The U.S. Aggregate Bond Index was closer to the bottom, down -0.78%, and is up 1.7% in the past year, but down -2.46% in the past three years. Short-term bonds were near the top for Q1, and have positive longer returns for 3, 5 and 10 years. Here are the fixed income period returns: During the first quarter, the U.S. fixed income markets declined as interest rates climbed due to higher-than-expected inflation readings. Inflation has stopped its decline each month, due to the very strong fiscal spending by the government, which is not likely to end during an election year. The Fed, which was expected to lower rates 6 times at the start of the year, is now expected to lower rates two or three times and may not be able to raise rates until after the November election. We may only see one rate cut toward the very end of the year. The Fed continues its $8 trillion balance sheet reduction (selling bonds) at a rate of ~$95 billion per month or $1.1 trillion annually. Historically, the Fed only lowers the overnight lending rate when the job market looks to be in trouble, since its second mandate is full employment. Job market trouble is usually stock market trouble. However, stocks can continue up with a long pause by the Fed. The stock market considers hundreds of factors to determine asset prices, some more important than others. One cannot time markets and typically the short term is just noise. Here is a sample of how the world stock markets responded to headline news, during the last quarter and the last year (notice the insert of the second graph that compares the last 12 months to the long term). We encourage you to tune out the financial news, since major news sources have a bias toward negative headlines; and often the headlines of the day have very little to do with the direction of stocks. CONCLUSION The positive run for stocks and bonds during 2023 continued into the first quarter of 2024 and the major U.S. stock indices are at new record highs. The strong returns are driven by just seven very large companies known as the magnificent seven: Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, and the valuation of the S&P 500 has increased to a level that some argue isn’t sustainable, while others argue, it is not near the peak of the internet bubble. This argument assumes the AI craze is as big as the internet and it may turn out to be. However, the internet bubble collapse was most painful for the tech sector; and it took the Nasdaq 15 years to regain its peak during the internet bubble. This is the reason we hold globally diversified portfolios. Stock valuations are much more reasonable around the world, and it would be reasonable to expect a shift to international out-performance in the future. Our recommendation, as always, is to tune out the news and focus on what you can control with your financial well-being in the new year. We are here to help you succeed and look forward to seeing you soon. Here is a timely piece from our friends at Dimensional: Some investors attribute the Magnificent 7 stocks’ dominance to a “winner-take-all” environment in which a handful of companies achieve sufficient market share to hinder competition.1 In businesses where gaining users drives success, establishing a strong market share may be like building a moat around profitability. But that doesn’t guarantee these companies can stay on top. Think about the state of mobile phones 15 years ago. In all likelihood, you would have been reading this on a BlackBerry, such was that device’s entrenchment for mobile business communication. Then, along came iPhones and Androids and suddenly BlackBerry’s foothold was eroded. History is littered with examples of household names that were usurped by the Next Big Thing. Remember, Sears was a Top 10-sized stock in the US once upon a time. AOL was synonymous with internet access in the 1990s. And in 2003, the most popular social media network starting with the letter F was Friendster. Even the biggest companies have uncertain futures, highlighting the need for broadly diversified investments. And even if these companies stay at the top of the market, that’s no assurance higher returns will continue if their success is expected. Standardized Performance Data and Disclosures Russell data © Russell Investment Group 1995-2022, all rights reserved. Dow Jones data provided by Dow Jones Indexes. MSCI data copyright MSCI 2022, all rights reserved. S&P data provided by Standard & Poor’s Index Services Group. The BofA Merrill Lynch Indices are used with permission; © 2022 Merrill Lynch, Pierce, Fenner & Smith Inc.; all rights reserved. Citigroup bond indices copyright 2022 by Citigroup. Barclays data provided by Barclays Bank PLC. Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. This information is provided for educational purposes only and should not be considered investment advice or a solicitation to buy or sell securities.  Diversification does not guarantee investment returns and does not eliminate the risk of loss. Investing risks include loss of principal and fluctuating value. Small cap securities are subject to greater volatility than those in other asset categories. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Sector-specific investments can also increase these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, liquidity, prepayments, and other factors. REIT risks include changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. Principal Risks: The principal risks of investing may include one or more of the following: market risk, small companies risk, risk of concentrating in the real estate industry, foreign securities risk and currencies risk, emerging markets risk, banking concentration risk, foreign government debt risk, interest rate risk, risk of investing for inflation protection, credit risk, risk of municipal securities, derivatives risk, securities lending risk, call risk, liquidity risk, income risk. Value investment risk. Investing strategy risk. To more fully understand the risks related to investment in the funds, investors should read each fund’s prospectus. Investments in foreign issuers are subject to certain considerations that are not associated with investment in US public companies. Investment in the International Equity, Emerging Markets Equity and the Global Fixed Income Portfolios and Indices will be denominated in foreign currencies. Changes in the relative value of these foreign currencies and the US dollar, therefore, will affect the value of investments in the Portfolios. However, the Global Fixed Income Portfolios and Indices may utilize forward currency contracts to attempt to protect against uncertainty in the level of future currency rates (if applicable), to hedge against fluctuations in currency exchange rates or to transfer balances from one currency to another. Foreign Securities prices may decline or fluctuate because of (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. The Real Estate Indices are each concentrated in the real estate industry. The exclusive focus by Real Estate Securities Portfolios on the real estate industry will cause the Real Estate Securities Portfolios to be exposed to the general risks of direct real estate ownership. The value of securities in the real estate industry can be affected by changes in real estate values and rental income, property taxes, and tax and regulatory requirements. Also, the value of securities in the real estate industry may decline with changes in interest rate. Investing in REITS and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITS and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidations. REITS and REIT-like entities also are subject to the possibility of failing to qualify for tax free pass through of income. Also, many foreign REIT-like entities are deemed for tax purposes as passive foreign investment companies (PFICs), which could result in the receipt of taxable dividends to shareholders at an unfavorable tax rate. Also, because REITS and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. The performance of Real Estate Securities Portfolios may be materially different from the broad equity market. Fixed Income Portfolios: The net asset value of a fund that invests in fixed income securities will fluctuate when interest rates rise. An investor can lose principal value investing in a fixed income fund during a rising interest rate environment. The Portfolio may also be affected by: call risk, which is the risk that during periods of falling interest rates, a bond issuer will call or repay a higher-yielding bond before its maturity date; credit risk, which is the risk that a bond issuer will fail to pay interest and principal in a timely manner. Risk of Banking Concentration: Focus on the banking industry would link the performance of the short-term fixed income indices to changes in performance of the banking industry generally. For example, a change in the market’s perception of the riskiness of banks compared to non-banks would cause the Portfolio’s values to fluctuate. The material is solely for informational purposes and shall not constitute an offer to sell or the solicitation to buy securities.  The opinions expressed herein represent the current, good faith views of Lake Tahoe Wealth Management, Inc. (LTWM) as of the date indicated and are provided for limited purposes, are not definitive investment advice, and should not be relied on as such.  The information presented in this presentation has been developed internally and/or obtained from sources believed to be reliable; however, LTWM does not guarantee the accuracy, adequacy or completeness of such information. Predictions, opinions, and other information contained in this presentation are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and LTWM assumes no duty to and does not undertake to update forward-looking statements.  Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.  Actual results could differ materially from those anticipated in forward looking statements. No investment strategy can guarantee performance results. All investments are subject to investment risk, including loss of principal invested. Lake Tahoe Wealth Management, Inc.is a Registered Investment Advisory Firm with the Securities Exchange Commission.

Receiving a tax refund can feel like a financial windfall, providing an unearmarked sum of cash that presents a unique opportunity to strengthen your financial standing.  However, with life’s ongoing demands and unexpected expenses it is easy for good intentions to get bypassed and be left with a feeling of treading water. Below are a few ideas on leveraging your tax refund to maximize its impact in line with your overall financial goals. Accelerate Debt Repayment.  Put your tax refund to work by speeding up the repayment of outstanding debts.  Whether it is paying down student loans, auto loans or a home equity line of credit, you can significantly reduce the total interest paid and expedite your path to debt-free living.  Often the debt with the highest interest rate is where to begin.  Talking with your financial planner will provide insight into what works best for your specific situation. Bolster Your Cash Reserve / Emergency Fund.  Ensure greater financial stability by increasing your cash reserves.  An emergency fund acts as a safety net for unforeseen expenses like home or auto repairs, or in the event of a job loss.  If your emergency fund is not ready to cover three to six months of regular expenses, consider using your tax refund to solidify this vital financial safety net. Supercharge Retirement Savings.  Boost your retirement nest egg if you are not already maximizing your contributions.  Pretax contributions to your employer 401k or an IRA will reduce your taxable income for the current year.  A Roth IRA might make even more sense if eligible since from an emotional standpoint this is money that is not coming from your regular paycheck so getting into the potential “tax-free” world of the Roth doesn’t impact your on-going spending. Diversify Your Investment Accounts:  If you are already maxing out your retirement contributions, explore opportunities beyond retirement accounts such as an after-tax brokerage account invested in a manner aligned with your financial goals. Accelerate Savings For a Major Financial Goal: Maybe it is saving for a down payment on an house, or a special vacation, your tax refund can accelerate your savings progress to that goal.  Choose an appropriate savings vehicle based on your time horizon for the goal and accessibility needs.  Right now, high yield savings accounts or certificates of deposit are a good choice for many intermediate goals. Take Advantage of a Health Savings Account If Eligible.  If you have a high deductible health plan you should explore maxing the contributions to a Health Savings Account.   An HSA potentially has a triple tax benefit.  Contributions are deductible at the federal level, growth is tax-deferred, and distributions are potentially tax free if you follow the rules.  (Look for more in-depth information about HSAs in a blog post in May). Invest in Education: Invest in your child’s future by using your tax refund to jump start or increase 529 savings.  529 plans provide tax-free distributions for qualified education expenses and now thanks to the Secure Act 2.0 some funds from an established 529 account can be transferred tax-free to a Roth IRA for the beneficiary of the 529 account.  Do note that there are limitations and many nuances to navigate so working with your financial planner is highly recommended. Using your tax refund to strengthen your financial plan is great.  However, if you are getting a refund that means you have made an interest free loan to the government.  Adjusting your tax withholding for the current year to prevent overpaying taxes will likely free up take home pay throughout the year, allowing you to allocate more to your financial goals on an ongoing basis. Every financial decision should be made in alignment with your long-term objectives and risk profile.  Lake Tahoe Wealth Management is here to provide support and guidance.  Reach out with questions on how to best leverage your tax refund to improve your personal financial plan.

As the calendar flips to the new year, our focus at Lake Tahoe Wealth Management shifts to cash flow planning. Those of you taking distributions, or starting to in the near future, have probably wrestled with the questions that come up in this process. How much do I need from my portfolio each month? How much can I afford to take? Where should I be taking it from? LTWM advisors strive to make these discussions open and collaborative, tailoring our planning to each individual client’s needs, goals, and comfort level. With that being said, our advisors enter these conversations already prepped with data and analysis in tow. For potential clients looking to understand our process, or current clients wanting an in-depth look at our methods, here’s a peek behind the LTWM curtain… The Withdrawal Amount How much can I afford to take from my portfolio? It’s one of the most common, and probably one of the most challenging questions about cash flow planning in retirement. For many of our clients, it’s the question that brought them here. Frustratingly, there’s no perfect answer, or one-size-fits-all approach to reach it. The right number depends on your retirement income, your goals, your risk tolerance, and a myriad of other factors. Your LTWM advisor is here, armed with quantitative information and years of experience, to help chart the path forward that’s best for you. First, though, a disclaimer: Your money is your money. We’re here to steer the conversation in a sustainable direction grounded in numerical evidence, but you are still the driver. You won’t hear a LTWM advisor tell you what you can and cannot do; rather, our role is to understand your situation and goals, and use them create a plan that satisfies your needs while also giving you the peace of mind to know that you can afford your distribution. As you go through the initial distribution planning process, your advisor will help you gain an understanding of what is affordable and sustainable given your financial situation. But how does your advisor know? One of our most useful tools is Monte Carlo simulations, a modeling method that uses simulations to quantify probabilities in situations far too complicated for simpler arithmetic methods. To be more specific, we pour the details of your financial situation, including goals, asset allocation, liabilities, and timeframe into our financial planning software; the software then runs thousands of simulations using a set distribution of potential market returns, modeling potential future market outcomes and seeing in how many of them your financial goals are met. If your plan is successful in most of the simulations, that likely means your distribution amount is sustainable. Tax Efficiency Ok, so, you and your advisor have landed on a number. Congratulations! Hopefully, you are already feeling the weight lifted off your shoulders. While you can start thinking about the more enjoyable aspects of retirement (piña coladas, anyone?), the work your advisor does for you is just beginning. There are still several ways to optimize your cash flow plan, and chief among them is tax efficiency. Our goal is to get you your money in the least expensive way possible. That is, we want to get you your money while incurring as little tax as possible. The tricky part is this: the lowest-tax method for your distributions this year might not be the most efficient method in the long run. After all, we’re invested in the success of your plan not just today, but for the rest of your life, just like you! Most retirees have their assets split between multiple types of account, each with their own tax treatment. The three most common types are as follows: Taxable accounts. This is your standard brokerage account. Gains generated from assets sold for profit are taxed at the applicable capital gain tax rate. Pre-tax accounts, also known as tax-deferred accounts. Most common examples are Traditional IRAs and 401(k)s, but this category also includes SEP IRAs, SIMPLE IRAs, 403(b)s, and 457s. Distributions from pre-tax accounts are taxed at the applicable ordinary income tax rate. After-tax accounts. The most common examples are Roth IRAs and Roth 401(k)s. Qualified distributions from Roths are not taxed. If all of our money was in a Roth, tax planning would be simple! However, that’s rarely the case. Usually, Roth IRAs make up only a portion of an overall portfolio, meaning we need to be strategic about when we use them. Between Required Minimum Distributions (RMDs) and the start of Social Security, most retirees see an increase in taxable income the later into retirement they get. For many, this pushes them into higher ordinary income and capital gain brackets. So, while it may be tempting to draw from your Roth this year, that could mean paying more tax in later years unnecessarily. Why use your Roth funds to avoid a lower marginal tax rate this year, when you could use them to avoid a higher marginal tax rate after your RMDs and Social Security kick in? The Tax Projection So, if taking everything from your Roth IRA isn’t usually the right move, then what is? The answer to that question depends on many factors and is different for every person. To answer that question for you, we start by projecting your income for the current year in our tax planning software. To do this, we go line by line on your most recent tax return, changing any items for which we expect a different amount this year. Some of these changes are straightforward, like IRA RMDs and Social Security COLAs. For others, we rely on our relationship with you and our previous knowledge of your financial landscape. Events like retirements, job changes, children starting college, business sales, or even electric car purchases can all change your tax situation, and we use our in-depth knowledge of each of our clients to make sure all bases are covered. Once your tax projection is complete, we’ll have a good idea of what your taxable income for the year will be. From there, we can determine your projected marginal ordinary income and capital gain tax rates as well as how much headroom you have in each bracket, which will form the basis of our recommendation. The tax projection lets us know what we’re working with, and allows us to directly compare the current-year tax impact of different cash-generating strategies. What does your future hold? The tax projection sets our baseline, and clearly defines the variables we’re working with, but context is important too. Two people with the same taxable income could have wildly different financial pictures. If we expect income to increase in the future, then “filling out” the current bracket by taking money from a Traditional IRA would make a lot of sense. Conversely, if someone is in an unusually high tax bracket because of a one-time taxable gain, like a home sale for example, “filling out” their current bracket would mean incurring tax at a higher-than-normal tax rate, and a Roth IRA distribution might be more appropriate. As we plan for your individual cash need, we’ll consider your individual context, and what changes we expect in your future. That, in turn, will illuminate which path forward makes the most sense for you. An Example Let’s illustrate this process with an example. Say we have a client, Collette, who is 64 years old and lives in a state with no income tax. Collette was lucky enough to retire at 62, and since then has earned about $40,000 a year from her rental properties and some consulting here and there. After speaking with her financial planner, Collette decided she can afford to spend $10,000 a month, which means she’ll need an additional $80,000 from her portfolio this year. She has both a Traditional IRA and a Roth IRA, both of which have balances big enough to cover this year’s cash need. Additionally, she has $95,000 in a brokerage account with $15,000 in unrealized gains. Collette’s advisor would first use the above information to compile a tax projection for the year. The projection would show Collette in the middle of the 12% ordinary income bracket and still in the 0% capital gains bracket, with about $21,000 of headroom in both. However, the tax projection is just a baseline. Collette’s advisor still needs to determine the most appropriate method for generating the $80,000 she needs, which may create further tax liability. With the current year tax projection complete, Collette’s advisor would turn their attention to future years. Next year, Collette will reach full retirement age for her former employer’s pension plan and will start to receive an additional $60,000 a year. This will be important in evaluating the impact of any distribution strategy on Collette’s long-term financial plan. Now, with the tax projection finished and the future changes noted, her advisor can evaluate the impact of each potential funding source. Collette’s advisor, knowing about her impending pension income, would rule out using only Roth IRA distributions right away. Her pension income will push her into the 22% marginal bracket next year, and Social Security will likely take her into the 24% marginal bracket when she turns 67. Why use Roth funds to avoid paying a 12% tax rate this year when she could use it to avoid paying twice that in three years? With the 100% Roth IRA distribution ruled out, two options remain: the Traditional IRA and the brokerage account. Let’s compare the two: The Traditional IRA Considering that Traditional IRA distributions are taxable at the ordinary income rate, Collette would need to distribute around $100,000 from her Traditional IRA to generate the $80,000 after taxes. The first $21,000 of distributions would fall into her 12% ordinary income bracket, which is 10% lower than the expected tax rate on her IRA distributions after her pension kicks in. However, the remaining $79,000 of distribution would be taxed at either 22 or 24%, right in line with future rates. While being taxed at future rates isn’t a bad outcome, there’s no benefit to it either; it’s essentially a wash. Collette’s advisor would likely recommend filling only the 22% bracket with Traditional IRA distributions and using Roth IRA distributions to cover the remaining cash need. That way, Collette’s exposure to her highest expected marginal tax rate is limited. In the end, the benefit of this strategy would be paying 10% less in taxes on $21,000 worth of distributions. The Brokerage Account To cover her cash need with her brokerage account, Collette’s advisor would only need to create $15,000 in taxable income. This is because her initial contribution, or “basis,” isn’t taxed on withdrawal; only the gains on her contributions are taxable. So, even though $80,000 would need to leave the account, only the $15,000 of gains would be taxed. Another important note is that gains on assets in taxable accounts that are held for more than one year are taxed at the capital gains rate, which is different than ordinary income rates. As stated previously, Collette’s current capital gains rate is 0%, meaning she wouldn’t have any additional tax from the withdrawal. After her pension starts, Collette would be pushed into the 15% capital gains bracket, meaning she’d save 15% on the $15,000 by realizing the gain this year. After the analysis above, Collette’s advisor would recommend generating her needed cash entirely from the brokerage account. Since she has more money in the brokerage account than she needs for just this year, not all of the assets would need to be sold. Her advisor would recommend selling the assets with the most gain, as this year is the last year with the advantageous capital gains rate. Additionally, because she had $21,000 of headroom in her marginal brackets but only generated $15,000 in new income, Collette could still realize $6,000 in additional income at the current marginal rates. Her advisor would likely recommend a $6,000 Roth conversion, which would incur ordinary income tax at the current 12% rate but move the funds to her Roth IRA (more on this later). That way, she can access those funds tax-free when her marginal rate has increased to 24%. Overall, this strategy would save her almost $3,000! Other Considerations Unexpected Changes Sometimes, even the best projection can be rendered incorrect by unanticipated events. To account for this, LTWM advisors often do cash flow planning in stages, generating cash for only a few months at a time. This avoids incurring taxes unnecessarily early and allows us to react to unexpected changes with maximum flexibility. Medicare Costs Medicare part B and D premiums can increase when you cross certain income thresholds. LTWM advisors factor in these increases when computing the tax consequences of cash-generating transactions for Medicare-eligible clients. Charitable Giving Charitable gifts can be deducted from taxable income when using an itemized deduction. For clients who give routinely, there may be ways to maximize the tax efficiency of donations. One tool for this is a Donor-Advised Fund, which can be used to donate highly-appreciated capital gain assets without realizing any of the capital gain. Roth Conversions Sometimes, even after all the necessary cash has been raised, a client will have headroom remaining in a marginal tax bracket they won’t be able to access in future years due to income increases. When this happens, we often recommend a Roth conversion to “fill” the lower tax bracket. A Roth conversion transfers funds from your Traditional IRA to your Roth IRA. The transferred amount is taxed in the current year, but the funds continue to grow tax-free in the Roth and can be distributed tax-free in future years when marginal rates may be higher. This is especially useful for clients with large Traditional IRAs, whose Required Minimum Distributions often push them into higher brackets. Conclusion Planning for retirement distributions without help can be a challenging and overwhelming experience. It’s hard to know how much you can afford, optimizing your withdrawals takes a lot of legwork, and flipping from the “saving” to “spending” mindset can be difficult for some. Lake Tahoe Wealth Management advisors are here to help you every step of the way. We consider the full breadth of your financial landscape to make an individually tailored roadmap to success, and use our understanding and experience to help ease the anxiety of transition. Our job is to sweat the small details, so you can enjoy your bigger picture! Interested in learning more? Contact an advisor or sign up for a TestDrive™ today!

Have you ever been watching a really great movie, thoroughly enjoying it, only to be disappointed by the ending? You sense the ending is near, things take a turn for the worse, and you're left with that overwhelming urge to say, 'NO… make it stop, go back!' I can relate. Haven't you wished at times that you could rewrite certain endings? Imagined a different, more satisfying conclusion that would have truly made the movie better? While we might not have complete control over how our own life ends, we do have a say. This concept of "writing your own ending" was the central theme of an event I attended featuring Barbara Combs Lee, the author of Finish Strong: Putting Your Priorities First at Life’s End.  During her talk, a primary point was made that life is a story with a beginning, middle, and end. Our parents set the stage at the beginning, but in the early-middle of life, we take the reins and become the authors. We meticulously plan our careers, family lives, where we live, and even our impact on others. But when it comes to planning our ending, we do the minimum or worse avoid planning at all.  In fact, according to this ongoing Pew Research, less than half of us take the initiative to write our own ending. All too often, conversations about end-of-life preferences involve problematic statements like 'just shoot me' or the infamous 'pillow pact.' These are indicative of a preference for quality over quantity of life. Again, according to the Pew Research, 57% of American adults would prefer to stop medical treatment if faced with significant pain and little hope for improvement. Turns out doctors aren’t really prepared to help us write a good ending either.  Atul Gwande, a practicing physician and author, points this out in his latest book, Being Mortal.  Gwande brings an important perspective, that of a doctor.  He points out that those who aspire to become a doctor do so because they want to help people, make them better, and save lives.  Which is great, until it’s not. Gawande’s insights highlight the distinction between “quantity of life” and “quality of life.” A treatment or procedure may extend a person’s life, but it could also permanently diminish the quality.  All too often this important distinction is not clearly articulated or discussed between patient and physician. Without such important discussions the opportunity to have meaningful conversation regarding preferences and considerations of how to proceed is lost.  And, that, can lead to sad endings. Having spent the better part of a year studying late stage planning and end of life consideration, I’ll share just a minute of what my personal experience and journey was like because I think it may be helpful to others.  This research was done as a group project with my study group.  Anyone who knows me, knows that I love my study group! We have monthly phone calls to discuss and share what we’ve learned and are researching.  I generally enjoy the calls and look forward to them. But. This topic changed that. I found myself being “too busy” to do my research. The calls were uncomfortable.  I didn’t really look forward to doing the work.  Gwande’s book made me cry, several times. This all came to a crescendo when preparing my advanced health care directive as part of a group exercise.  I had an epiphany!  The focus on planning my death and dying was making me sad; but, it was just that - a plan. I wasn’t going to die because I put a plan in place.  I was going to die (someday) because I am mortal.  And like any other plan I create (or help clients create), it’s not magically going to happen tomorrow.  Just because I put a in place now, it didn’t mean that my life was over. Rather, it brought more meaning and appreciation for living.  Further, it was similar to all the other planning in that it is something to review and update periodically. As a financial planner, most of my work with clients revolves around the middle stages of life. In discussions with colleagues, I've noticed a significant neglect of end-of-life planning. Generally, people tend to avoid thinking, discussing, or planning for it. Unfortunately, this avoidance continues until one is faced with the overwhelming feeling of "NO... make it stop!" At that point, individuals are forced to make decisions, and substantive planning becomes impossible. My goal is to change this approach and encourage proactive end-of-life planning. In our present time and in this country, as Coombs-Lee suggests, we are fortunate to have the privilege to author our ending. So, why not craft a positive one? This involves not only summoning the courage to delve into the subject, dare imagine an ideal ending, and nurture the relationships with those who you’d like involved.  Equally important is ensuring that appropriate and supportive estate planning documents are in place and communicating your wishes with your loved ones. I’ve assembled several resources you may find useful. Those are: Compassion & Choices https://compassionandchoices.org/resources Prepare for you care https://prepareforyourcare.org/welcome Care Right https://carerightinc.com/ Additionally, you can borrow from Stephen Covey’s 7 Habits of Highly Effective People.  Habit number one is to begin with the end in mind. How do you want to be remembered? One of the more lighthearted exercises I engaged in was planning my day of remembrance. There was something heartwarming about organizing a party for my friends and family, selecting my favorite location, choosing the music to be played, and food to be enjoyed. I want there to be a mood celebration for my life rather than mourning my departure. With a bit of time, reflection, and the acknowledgment of our mortality, I now feel empowered instead of sad and fearful. I encourage you to give it a try!

Executive Summary The fourth quarter was exceptionally strong for stocks, so it was important to believe in the strength of the American consumer and the power of the Fed when stocks and bonds were hitting lows last quarter (see our last quarterly commentary here). Inflation continued to decline and the probability of the first Federal Reserve interest rate cut increased for the new year. The Fed has paused since its last rate hike in July of 2023. The first cut may be as early as Q1, most likely in Q2, but could be pushed out to the end of the year, or beyond, if the economy remains robust enough to keep adding jobs. We would like to see a long pause from the Fed based on the strength of the economy. Bond yields have already responded, moving down substantially across longer maturities, in anticipation of the first interest rate cut. The last stock market record high was January 5th, 2022, and we are currently very close to the same level for the S&P 500. The momentum from 2023 is strong and will likely continue if the strength of the U.S. job market continues and U.S. consumer spending drives GDP and corporate earnings growth higher. The bond market is back in balance between sellers and buyers as a dovish change in language by the Fed caused a sharp reversal in longer term U.S. Treasury yields from short covering. The current sentiment of bond investors is an overwhelming agreement that the next move by the Fed will be a rate cut. We are cautious due to the high valuation of U.S. stocks but remain optimistic on the U.S. job market and improved productivity from new technologies. We want to remind you we are watching all the developments closely, especially small-cap stocks, which performed very well during the last two months of last year. We look forward to our planning discussions for the new year and meeting with you, whether in person or virtually. For those who would like a deeper dive into the details, please continue reading… World Asset Class 4th Quarter 2023 Index Returns The fourth quarter was very positive for all major index returns and most finished near highs for 2023. For the broad U.S. Stock Market, the fourth quarter return of 12.07% was well above the average quarterly return of 2.3% since January 2001. International Developed Stocks returned 10.51%, also well above the long-term average quarterly return of 1.6%. Emerging Market Stocks returned 7.86%, well above the average quarterly return of 2.5%. Global Real Estate Stocks returned 15.47%, assisted by much lower interest rates and well above the asset class’s average quarterly return of 2.3%. The continued decline in inflation and less threatening language from the Federal Reserve led to a sharp decline in bond yields during the quarter and enabled risky asset classes to perform well. Here is a look at broad asset class returns over the past year (2023) and longer time periods (annualized): For the past year, U.S. stocks led all broad categories with a positive return of 25.96%, International Developed stocks were up 17.94%, Emerging Markets stocks were up 9.83%, and Global Real Estate stocks were up 10.23%. The U.S. Bond Market gained 5.53% and Global Bonds were up 8.32% for the past year. Over the past five years, U.S. stocks were up 15.16% annually, while International Developed stocks were up 8.45% annually, Emerging Market stocks were up 3.68% annually, and Global Real Estate stocks were up 4.16% annually. The U.S. Bond Market was up 1.1% annually for the past five years, while Global Bonds were up 1.5% annually. Over the past 10 years, the U.S. stock market (up 11.48% annually) is well ahead of International Developed (up 4.32% annually), Emerging Markets (EM) stocks (up 2.66% annually) and Global Real Estate stocks (up 4.72% annually). U.S. Bonds were up 1.81% and Global Bonds were up 2.8%, annually over the last 10 years. Taking a closer look within U.S. stocks during the fourth quarter, many asset classes had strong returns. At the top, for the second quarter in a row, is Small Cap Value, which was up 15.26%, while Large Growth was just over 1% behind, up 14.16% for Q4. Small Cap stocks (up 14.03%) and Small Growth (up 12.75%) were above Marketwide results of up 12.07%. There was a noticeable shift to small cap stocks during the last two months of 2023 and if the trend continues, it would be excellent for all stocks. So far, there is no evidence of a systemic banking concern, including commercial real estate loans. The regional banking ETF, symbol KRE, recovered back to levels close to pre-crisis, prior to the collapse of Silicon Valley Bank during the fourth quarter. We believe almost all banks will make it through a period of higher default rates as lenders and borrowers negotiate new loans. The lower level of interest rates helps borrowers and American consumers as mortgage rates and auto loan rates decline, making asset purchases more affordable. If we extend our analysis of U.S. stocks over longer time periods, Large Growth stocks lead over the past year, up an amazing 42.68% vs. 11.46% for Large Value. Interestingly, Large Value is tied with Large Growth over three years, both are up 8.86% annually. Large Growth has been the top returning asset class over the past 5 and 10 years. It is worth noting that U.S. Market wide results for the past 10 years are robust, up 11.48% annually. The U.S. business cycle continues to slow, the Conference Board Leading Economic Index, which consists of 12 leading economic indicators has slowed every month for the past 20 months and is 23 months off from its previous peak. On average for the index, there is 10.6 months between a peak and a recession, so the current cycle is well past the average. The four-week moving average of initial claims for unemployment insurance are back down to the lowest level in the last year, which means the U.S. job market remains very tight; and until it falters, we are not likely to experience a recession in the near term. The Fed has paused from hiking rates but continues to sell Treasuries and mortgages at a monthly pace of just under $100 billion, which has the effect of increasing yields. Higher interest rates in the U.S. create more demand for the U.S. dollar, which has appreciated against most foreign currencies. Japan’s central bank continues a strategy of Yield Curve Control (YCC) by purchasing bonds at all maturities and anchoring the short end of the curve near zero. The Japanese Yen has stabilized against the U.S. dollar and the stock market in Japan is at 33 year highs (March 1990), led by tech stocks. International Developed Value Stocks were up in local currency, but up more in U.S. dollars, since the dollar depreciated against most foreign currencies during the fourth quarter. The Euro went from $1.05 to its current value of $1.10. It is still down from $1.18 2.5 years ago. The currency effect served as a 5% tailwind, boosting international stock returns during the quarter. The value premium (Value-Growth) was negative 4% (8.57% vs. 12.52%), and the size premium was slightly positive (Small Cap-Large Cap, 10.6% vs. 10.51%). Our investment funds are priced in U.S. dollars (unhedged) and benefit from a weakening U.S. dollar: Over longer time periods, the value premium (value-growth) is positive over the past 1 and 3-year period, but still negative for 5 and 10 years. The size factor premium (small cap-large cap) is positive in the past quarter, negative in the YTD, 1-year, 3-year and 5-year periods and positive over the past 10 years. Moving the commentary to fixed income, bond market returns around the world were positive during the fourth quarter, as yields decreased for most bond maturities. The bond market is now predicting multiple interest rate cuts by the Federal Reserve in 2024, but the Fed’s QT (quantitative tightening) program of selling $90-100 billion of bonds per month is expected to continue for many years. The yield on the 5-year Treasury note decreased by 76 basis points, ending the quarter at a yield of 3.84%, down from 4.6%. The yield on the 10-year Treasury note decreased by 71 basis points, ending the quarter at a yield of 3.88%, down from 4.59%. And the 30-year Treasury bond yield decreased by 70 bps to 4.03%, down from 4.73%. All fairly large declines and as yields come down, bond prices increase, and lower borrowing costs allow consumers and corporations to purchase more. Here is the U.S. yield curve, and you can see how yields decreased significantly for all maturities longer than 6 months (current yield curve in grey, one quarter ago in blue, and one year ago in green). The current yield curve is very similar to one year ago, except at the short end: Looking at fixed income asset classes, the highest fourth quarter bond return was for the U.S. Government Bond Index Long (long-term Treasuries), up an amazing 12.69% (recall the U.S. Government Bond Index Long was down -11.77% last quarter). The U.S. Aggregate Bond Index was up 6.82%. Short-term bonds were at the bottom end for Q4, after leading during Q3 and still have a 2.15% positive return annually for the past three years to lead all bond categories. The Aggregate Bond Index is down -3.31% over the past three years. Beware of the high volatility that can result from holding longer maturity bonds. Here are the fixed income period returns: During the fourth quarter, the U.S. fixed income markets benefitted by a sharp decline in interest rates as a result of reduced inflation and much more dovish language from the Federal Reserve. The Fed continues its $8 trillion balance sheet reduction (selling bonds) at a rate of ~$95 billion per month or $1.1 trillion annually. The sharp drop in long-term yields caused many hedge funds that were taking advantage of the third quarter supply-demand imbalance by shorting the ETF that tracks the 10-year Treasury (TLT) to unwind or cover what was a very crowded trade. The result was more than buying, higher prices and lower bond yields that would otherwise be the case. Historically, the Fed only lowers the overnight lending rate when jobs look to be in trouble, since its second mandate is full employment. Job trouble is usually stock market trouble. However, stocks can continue up with a long pause by the Fed now that the supply-demand imbalance in the Treasury market has normalized and jobs are plentiful. Real GDP growth for 2022 (full year) was 2.1% and is now expected to increase to 2.4% in 2023 and then slow to 0.9% in 2024. Much stronger GDP growth numbers than the estimates from the beginning of the fourth quarter of 2023. The stock market considers hundreds of factors to determine asset prices, some more important than others. One cannot time markets and typically the short term is just noise. Here is a sample of how the world stock markets responded to headline news, during the last quarter and the last year (notice the insert of the second graph that compares the last 12 months to the long term). We encourage you to tune out the financial news, since major news sources have a bias toward negative headlines; and often the headlines of the day have very little to do with the direction of stocks. CONCLUSION The positive run for stocks and bonds during 2023 will likely continue into the first quarter since the momentum during the final two months was so strong. The strong returns were due to the sharp decline in bond yields during the last quarter. The Fed changed its language enough to bring down Treasury yields. The labor market is holding up, GDP growth estimates have increased, and so far, major companies are not letting go of workers or if they are, new job openings are plentiful. Our recommendation, as always, is to tune out the news and focus on what you can control with your financial well-being in the new year. We are here to help you succeed and look forward to seeing you soon. Standardized Performance Data and Disclosures Russell data © Russell Investment Group 1995-2022, all rights reserved. Dow Jones data provided by Dow Jones Indexes. MSCI data copyright MSCI 2022, all rights reserved. S&P data provided by Standard & Poor’s Index Services Group. The BofA Merrill Lynch Indices are used with permission; © 2022 Merrill Lynch, Pierce, Fenner & Smith Inc.; all rights reserved. Citigroup bond indices copyright 2022 by Citigroup. Barclays data provided by Barclays Bank PLC. Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. This information is provided for educational purposes only and should not be considered investment advice or a solicitation to buy or sell securities. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Investing risks include loss of principal and fluctuating value. Small cap securities are subject to greater volatility than those in other asset categories. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Sector-specific investments can also increase these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, liquidity, prepayments, and other factors. REIT risks include changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. Principal Risks: The principal risks of investing may include one or more of the following: market risk, small companies risk, risk of concentrating in the real estate industry, foreign securities risk and currencies risk, emerging markets risk, banking concentration risk, foreign government debt risk, interest rate risk, risk of investing for inflation protection, credit risk, risk of municipal securities, derivatives risk, securities lending risk, call risk, liquidity risk, income risk. Value investment risk. Investing strategy risk. To more fully understand the risks related to investment in the funds, investors should read each fund’s prospectus. Investments in foreign issuers are subject to certain considerations that are not associated with investment in US public companies. Investment in the International Equity, Emerging Markets Equity and the Global Fixed Income Portfolios and Indices will be denominated in foreign currencies. Changes in the relative value of these foreign currencies and the US dollar, therefore, will affect the value of investments in the Portfolios. However, the Global Fixed Income Portfolios and Indices may utilize forward currency contracts to attempt to protect against uncertainty in the level of future currency rates (if applicable), to hedge against fluctuations in currency exchange rates or to transfer balances from one currency to another. Foreign Securities prices may decline or fluctuate because of (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. The Real Estate Indices are each concentrated in the real estate industry. The exclusive focus by Real Estate Securities Portfolios on the real estate industry will cause the Real Estate Securities Portfolios to be exposed to the general risks of direct real estate ownership. The value of securities in the real estate industry can be affected by changes in real estate values and rental income, property taxes, and tax and regulatory requirements. Also, the value of securities in the real estate industry may decline with changes in interest rate. Investing in REITS and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITS and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidations. REITS and REIT-like entities also are subject to the possibility of failing to qualify for tax free pass through of income. Also, many foreign REIT-like entities are deemed for tax purposes as passive foreign investment companies (PFICs), which could result in the receipt of taxable dividends to shareholders at an unfavorable tax rate. Also, because REITS and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. The performance of Real Estate Securities Portfolios may be materially different from the broad equity market. Fixed Income Portfolios: The net asset value of a fund that invests in fixed income securities will fluctuate when interest rates rise. An investor can lose principal value investing in a fixed income fund during a rising interest rate environment. The Portfolio may also be affected by: call risk, which is the risk that during periods of falling interest rates, a bond issuer will call or repay a higher-yielding bond before its maturity date; credit risk, which is the risk that a bond issuer will fail to pay interest and principal in a timely manner. Risk of Banking Concentration: Focus on the banking industry would link the performance of the short-term fixed income indices to changes in performance of the banking industry generally. For example, a change in the market’s perception of the riskiness of banks compared to non-banks would cause the Portfolio’s values to fluctuate. The material is solely for informational purposes and shall not constitute an offer to sell or the solicitation to buy securities. The opinions expressed herein represent the current, good faith views of Lake Tahoe Wealth Management, Inc. (LTWM) as of the date indicated and are provided for limited purposes, are not definitive investment advice, and should not be relied on as such. The information presented in this presentation has been developed internally and/or obtained from sources believed to be reliable; however, LTWM does not guarantee the accuracy, adequacy or completeness of such information. Predictions, opinions, and other information contained in this presentation are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and LTWM assumes no duty to and does not undertake to update forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward looking statements. No investment strategy can guarantee performance results. All investments are subject to investment risk, including loss of principal invested. Lake Tahoe Wealth Management, Inc.is a Registered Investment Advisory Firm with the Securities Exchange Commission.

Get ready to save more in your retirement plan and IRAs in 2024! The Treasury Department has adjusted how much you can contribute to your employer sponsored retirement plan and Individual Retirement Accounts (IRAs). For 2024, they are now as follows: Individual Retirement Accounts (IRAs) and Roth IRAs: you can now contribute $7,000 to Individual Retirement Accounts for 2024. If you are over the age of 50 by 12/31/2024, you can add a “catch up contribution” of $1,000, meaning you can save $8,000 in an IRA for 2024. (note: remember that 2023 contributions can be made until 4/15/2024.) The income ranges for determining eligibility to make deductible contributions to traditional Individua Retirement Accounts (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2024. If during the year either the taxpayer of the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated depending on filing status and income. For single taxpayers who are covered by an employer sponsored retirement plan the phase-out range is between $77,000 and $87,000. For married filing jointly the phase-out covers income ranging from $123,000 to $143,000 if a spouse who makes the IRA contribution is covered by an employer sponsored retirement plan. If the IRA contributor is not covered by an employer sponsored retirement plan but they are married to someone who is, the income phase out for deductibility is between $230,000 and $240,000. The phase out range for making Roth IRA contributions is $230,000 to $240,000 to couples married filing jointly. For singles and head of household the phase out range is $146,000 to $161,000. If you earn too much to contribute to a Roth IRA, you can make a non-deductible IRA contribution and convert it to a Roth IRA, which is often called a “backdoor Roth IRA contribution”. However, if you have existing funds in a traditional IRA there are tax implications of the “backdoor Roth contribution.” More on this here The income limit for the Saver’s Credit is $76,500 for married filing jointly, $57,375 for Heads of Household and $38,250 for singles and married filing separately. 401(k)s, 403(b)s, most 457 Plans, and the federal government’s Thrift Savings Plan: You can now save $23,000 in these plans for 2024, which is $500 more than in 2023. If you are age 50 or older by 12/31/2024 you can save an additional $7,500 in these plans for 2024, bringing your maximum contribution to $30,500. SEP IRAs and Solo 401(k)s: If you are self-employed or a small business owner, you can now save $69,000 in these plans for 2024. This is the amount you can contribute as an employer as a percentage of your salary. The compensation limit used in the savings calculation is now $345,000 for 2024. After-tax 401(k) contributions: If your employer allows after-tax contributions, you can also take advantage of the $69,000 limit for 2024. It is an overall cap that includes your pretax or Roth salary deferrals plus any employer contributions (but does not include catch-up contributions if you will be 50 or older on 12/31/2024). SIMPLE IRA: The limit on these accounts is now $16,000 for 2024. The catch-up contribution for those of you who will be 50 or over on 12/31/2024 is $3,500, bringing the total contribution for 2024 to $19,500. Defined Benefit Plans: The limit on the annual benefit of a Defined Benefit Plan is $275,000 for 2024. Due to the complicated rules around all the above, LTWM highly recommends seeking the advice of a qualified income tax professional such as a CPA or Enrolled Agent (EA). As always, please contact your Lake Tahoe Wealth Management Financial Planner to discuss the optimal method for saving for your future or if you have any questions.

Charitable Giving & Reducing Tax Liability (Win-Win) Charitable giving is win-win, benefiting both those in need and the generous individuals who give. There are opportunities for charitable giving to not only amplify the job of giving but also reduce one’s tax liability. If lightening your tax burden while making a meaningful impact on a charity or cause that is important to you, then you’ll want to keep reading… Gifting to charities benefits the causes you care about and can be done in a manner where Uncle Sam covers part of the donation and/or may provide you with an opportunity to make a larger donation. There are ways to make your charitable donations to reduce your tax liability even if you currently take the standard deduction. Qualified Charitable Donations The current IRS rules allow for anyone 70.5 and older to make Qualified Charitable Donations (QCD), up to $100,000/year, directly from your IRA to qualified charities. Normally, traditional (non-Roth) IRA distributions are taxed as ordinary income, but a QCD avoids taxation if you follow the rules. The primary rule requires that the distribution go directly from your traditional IRA custodian to the charity. If you take cash out of your traditional IRA and then give it to the charity, it will not count as a QCD, and the distribution will be taxable income. You could include the donation when itemizing, but not everyone itemizes and the direct QCD route reduces your Adjusted Gross Income which is more valuable than a “below the line” deduction. The QCD can be very powerful for those with a Required Minimum Distribution (RMD) that exceeds what you need or want to withdraw in that year. You can meet your RMD by any combination of personal distributions and Qualified Charitable Distributions. While the IRS permits up to $100,000 in QCDs per year there is no “roll-over” – any amount above your RMD for the current year will not count toward your RMD in future years. Donor Advised Funds Another option for charitable giving is to contribute to a Donor Advised Fund. This strategy allows for a current year deduction without having to decide which charities to support. There are no age restrictions on contributing to a donor advised fund. Since the donation is a “below the line” deduction (after your adjusted gross income is determined on the tax return) to benefit you will need to itemize your deductions (exceed the standard deduction). If you have the funds available, it is often more tax efficient to lump your planned giving into one year. Lumping multiple years of donations may assist in exceeding the standard deduction and/or offset a high-income tax year. If contributing cash to a donor advised fund you can deduct the amount of donation up to 50% of your AGI. Highly Appreciated Assets For many, especially high-income earners, donating highly appreciated securities to a charity or donor advised fund is much wiser than donating cash, since it includes a double benefit. You avoid paying the taxable capital gains when selling the security, and you get to deduct (if you itemize) the fair market value of the security when donated (if the security has been held for at least 1 year). You can deduct up to 30% of your AGI in a single year for donating appreciated securities. Important Note It is important to note there are many rules related to each of these strategies and this information is provided for educational purposes only. The IRS has multiple rules that must be followed, or you may compromise the eligibility of the tax deduction. You should always consult with a tax expert regarding your specific situation and circumstances prior to making any charitable contribution.

Executive Summary If the Federal Reserve Board handles the spike in yields resulting from the current lack of buyers in the U.S. Treasury bond market, which we believe it will, we remain cautiously optimistic on the strength of the American consumer, since jobs are still plentiful, and workers are proving to be very resourceful in the face of high inflation. There are challenges in many places that could represent a black swan event, and now we are all witnessing a second overseas conflict in the Middle East with Israel declaring war. Stocks are holding up much better than anticipated, going from red to green on the first day markets were open. The rally may be due to the breathing room it gives the Fed to move from raising rates to holding rates steady. Plenty of macroeconomic data exists to support either the bull or bear view for the last quarter of the year. The third quarter was negative for stocks and bonds, following two quarters of positive stock returns in 2023. The last stock market record high was January 5th, 2022; and stocks are currently below that level, but well above the low of October 2022. The bull market view is supported by the continued strength of the U.S. job market and when jobs are plentiful, U.S. consumer spending drives GDP and corporate earnings growth higher. The opposing view suggests that the bear market from 2022 has yet to conclude; and it foresees a looming recession as the likely outcome of the current level of very high interest rates aimed at reducing inflation back to 2%. The supply/demand balance of owning stocks appears neutral, but the bond market is out of balance with way more sellers than buyers; and that situation has caused a great deal of concern for stocks in the past quarter. A change in language by the Fed could cause a sharp reversal in longer term U.S. Treasury yields, which have climbed much higher than any forecast a short while ago. We are cautious due to the uncertainty and are maintaining a higher than normal level of portfolio cash; but remain optimistic about the prospects for normalized interest rates, continued economic and corporate earnings growth, and improved productivity from new technologies. We want to remind you we are watching all the developments closely and look forward to meeting with you soon. For those who would like a deeper dive into the details, please continue reading… World Asset Class 3rd Quarter 2023 Index Returns The third quarter was negative for all asset classes and especially for real estate, given the asset’s class interest rate sensitivity. All broad equity asset classes were negative in the third quarter, along with global and U.S. bonds, after two quarter of positive returns this year. For the broad U.S. Stock Market, the third quarter return of -3.25% was well below the average quarterly return of 2.2% since January 2001. International Developed Stocks returned -4.10%, also well behind the long-term average quarterly return of 1.5%. Emerging Market Stocks returned -2.93%, well below the average quarterly return of 2.4%. Global Real Estate Stocks returned -6.49%, well below the asset class’s average quarterly return of 2.1%. The rapid rise in bond yields during the quarter was unexpected and had a negative impact on all asset classes. Here is a look at broad asset class returns over the past year and longer time periods (annualized): For the past year, International Developed stocks led all broad categories with a positive return of 24.0%, U.S. stocks were close behind, up 20.46%, while Emerging Markets stocks were up 11.7% and Global Real Estate stocks were up 2.03%. The U.S. Bond Market gained 0.64% and Global Bonds were up 2.99% for the past year. Over the past five years, U.S. stocks were up 9.14% annually, while International Developed stocks were up 3.44% annually, Emerging Market stocks were up 0.55% annually, and Global Real Estate stocks were basically flat at 0.01% annually. The U.S. Bond Market was up 0.1% annually for the past five years, while Global Bonds were up 0.83% annually. Over the past 10 years, the U.S. stock market (up 11.28% annually) is well ahead of International Developed (up 3.84% annually) and Emerging Markets (EM) stocks, which are up only 2.07% annually over the past 10 years; Real Estate stocks are up 3.12% annually, US Bonds are up 1.13% and Global Bonds are up 2.3% annually. Taking a closer look within U.S. stocks during the third quarter, some asset classes were down more than others. At the top, is Small Cap Value, which was down the least (-2.96%), while Large Growth, Large Cap Blend and Large Cap Value were all about 15-20 bps lower and near Marketwide results of -3.25%. The hype around AI tech stocks flattened out during the third quarter. The regional banking index has yet to recover, as higher interest rates remain a concern for banks. Small cap growth stocks tend to sell off when a recession nears. So far, there is no evidence of a systemic banking concern, including commercial real estate loans. We believe almost all banks will make it through a period of higher default rates as lenders and borrowers negotiate new loans. The uncertain future weighs on small cap stocks, since large cap stocks are considered more defensive during challenging economic times. The Fed is receiving help from higher bond yields in its attempt to slow the economy to bring inflation back to its 2% target. Higher interest rates, including auto loans and mortgages reduces the demand for large ticket price assets. If we extend our analysis of U.S. stocks over longer time periods, Large Growth stocks lead over the past year, 27.72% vs. 14.44% for Large Value. However, Large Value is ahead of Large Growth over three years, 11.05% annually vs. 7.97% annually while Small Value stocks are ahead of both over the past three years, up 13.32%. Large Growth is the top returning asset class over the past 5 and 10 years. It is worth noting that U.S. Market wide results for the past 10 years remain very strong, up 11.28% annually. The U.S. business cycle continues to slow by many measures, and leading economic indicators have slowed every month for the past 20 months, which could place the economy in recession at some point this year or early next year. The American consumer is displaying signs of strain, spending is up in nominal terms, but down in real terms (after adjusting for inflation). The average wage earner is holding up because of a second job. Payroll jobs are up much more than household surveys (payrolls double count those with more than one job). However, claims for unemployment insurance are down from the second quarter, which means the U.S. job market remains very tight; and until it falters, we are not likely to experience a recession in the near term. The Fed has paused from hiking rates but continues to sell Treasuries and mortgages at a monthly pace of just under $100 billion, which has a similar effect as a rate cut every few months. Higher interest rates in the U.S. create more demand for the U.S. dollar, which has appreciated against most foreign currencies. Japan’s central bank continues a strategy of Yield Curve Control (YCC) by purchasing bonds at all maturities and anchoring the short end of the curve near zero. The Japanese Yen has depreciated significant against the U.S. dollar. International Developed Value Stocks were up in local currency, but up way less in U.S. dollars, since the dollar appreciated against most foreign currencies during the third quarter. The Euro went from $1.08 to its current value of $1.05. It is way down from $1.18 two years ago. The currency effect served as a near 3% headwind to international stock returns during the quarter. The value premium (Value-Growth) was very positive (0.19% vs. -8,24%), and the size premium was slightly positive (Small Cap-Large Cap, -3.48% vs. -4.1%). Our investment funds are priced in U.S. dollars (unhedged) and benefit from a weakening dollar and lose value with an appreciating dollar: Over longer time periods, the value premium (value-growth) is positive over the past 1 and 3-year period, but still negative for 5 and 10 years. The size factor premium (small cap-large cap) is positive in the past quarter, negative in the YTD, 1-year, 3-year and 5-year periods and positive over the past 10 years. Moving the commentary to fixed income, bond market returns around the world were negative during the third quarter, as yields increased for most bond maturities. The bond market is no longer predicting any more interest rate increases by the Federal Reserve, but the Fed’s QT (quantitative tightening) program of selling $90-100 billion of bonds per month is expected to continue for many years. The yield on the 5-year Treasury note increased by 47 basis points, ending the quarter at a yield of 4.6%. The yield on the 10-year Treasury note increased by 78 basis points, ending the quarter at a yield of 4.59%. And the 30-year Treasury bond yield increased by 88 bps to 4.73%. Here is the U.S. yield curve, and you can see how yields increased significantly for all maturities longer than 2 years (current yield curve in grey, one quarter ago in blue, and one year ago in green): Looking at fixed income asset classes, the highest third quarter bond return is for the U.S. 3-Month Treasury Bill Index, up 1.31%, while the One-Year Treasury Note Index was up 1.21%. At the bottom end for Q3, the U.S. Government Bond Index Long (long-term Treasuries), was down an amazing -11.77%, and it now down -15.66% annually for the past three years. The Aggregate Bond Index is down -5.21% over the past three years. Both resemble equity-like returns. Beware of the losses that can result from holding longer maturity bonds in an interest rate rising environment. Here are the fixed income period returns: During the third quarter, the U.S. fixed income markets were impacted by much more than a hawkish Fed to send yields up and bond prices down. The Fed continues its $8 trillion balance sheet reduction (selling bonds) at a rate of ~$95 billion per month or $1.1 trillion annually. The sharp rise in long-term yields resulted from many other factors reducing the supply of bonds and limiting demand. Other central banks around the world are reducing their dollar denominated holdings as they use other currencies in trade and finance; and no longer require large holdings of U.S. Treasuries. Primary Treasury bond issuance by the U.S. Treasury is very high due to the large deficit spending of the government, increasing the number of Treasuries for sale. Hedge funds are taking advantage of the supply-demand imbalance by shorting the ETF that tracks the 10-year Treasury (TLT), which has become a very crowded trade. The result is more sellers and fewer buyers. The Fed will only lower rates when jobs look to be in trouble. Historically, stocks start a long decline after the first Fed rate drop. However, stocks can continue up with a long pause by the Fed if the supply-demand imbalance in the Treasury market normalizes. At any time, the Fed could take action to stop the rapid rise in yields by simply speaking more dovish or by threatening to lower rates, due to an external conflict like war in the Middle East. The final read of U.S. GDP for the first quarter of 2023 was up substantially (2%) from the second read of GDP for the first quarter at 1.3% (1st estimate was 1.1%). GDP growth came in at an annual increase of 2.6% in the fourth quarter (final read after 2.9% initial). Real GDP growth for 2022 (full year) was 2.1% and is now expected to slow to 2.0% in 2023 and 0.8% in 2024. Much stronger GDP growth numbers than the estimates from the beginning of 2023. One cannot time markets and typically the short term is just noise. Here is a sample of how the world stock markets responded to headline news, during the last quarter and the last year (notice the insert of the second graph that compares the last 12 months to the long term). We encourage you to tune out the financial news, since major news sources have a bias toward negative headlines; and often the headlines of the day have very little to do with the direction of stocks. CONCLUSION The unexpected jump in bond yields during the last quarter caused stocks to have negative returns. The new conflict in the Middle East is likely to keep the Fed from another rate hike. Rates may remain higher for longer, which is the new Fed mantra, but change in language is all that is needed to bring down Treasury yields.. The inflation outlook is improving slowly. The labor market is starting to show cracks, consumers are more cautious with spending, and so far, major companies are not letting go of workers or if they are, new job openings are plentiful. Our recommendation, as always, is to tune out the news and focus on what you can control with your financial well-being. Please reach out to us with any questions or concerns. We are here to help you succeed and look forward to seeing you soon. Here is an important piece from our friends at Dimensional, reminding us about the power of value stocks: The first half of 2023 marks the tenth time since 1926 that value stocks have underperformed growth stocks by more than 20 percentage points over a two-quarter period. More often than not, value has responded like the hero in an action movie, beating growth over the following four quarters in seven of the nine previous instances and averaging a cumulative outperformance of nearly 29 percentage points. The sample size may be small, but a positive average value premium following a large negative period is not too surprising. In fact, looking at the other side of the value performance distribution, there have been 19 two-quarter periods with the value premium exceeding positive 20%. In 11 of these, value outperformance continued over the next four quarters. The average premium across all 19 was 3.6%. It’s notoriously challenging to find an indicator that consistently predicts negative value premiums. Regardless of value’s recent performance, investors should expect positive value premiums going forward. That’s a strong incentive for investors to maintain a disciplined stance to asset allocation, so they can capture the outperformance when value stocks deliver. Standardized Performance Data and Disclosures Russell data © Russell Investment Group 1995-2022, all rights reserved. Dow Jones data provided by Dow Jones Indexes. MSCI data copyright MSCI 2022, all rights reserved. S&P data provided by Standard & Poor’s Index Services Group. The BofA Merrill Lynch Indices are used with permission; © 2022 Merrill Lynch, Pierce, Fenner & Smith Inc.; all rights reserved. Citigroup bond indices copyright 2022 by Citigroup. Barclays data provided by Barclays Bank PLC. Indices are not available for direct investment; their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results. This information is provided for educational purposes only and should not be considered investment advice or a solicitation to buy or sell securities. Diversification does not guarantee investment returns and does not eliminate the risk of loss. Investing risks include loss of principal and fluctuating value. Small cap securities are subject to greater volatility than those in other asset categories. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Sector-specific investments can also increase these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other risks including changes in credit quality, liquidity, prepayments, and other factors. REIT risks include changes in real estate values and property taxes, interest rates, cash flow of underlying real estate assets, supply and demand, and the management skill and creditworthiness of the issuer. Principal Risks: The principal risks of investing may include one or more of the following: market risk, small companies risk, risk of concentrating in the real estate industry, foreign securities risk and currencies risk, emerging markets risk, banking concentration risk, foreign government debt risk, interest rate risk, risk of investing for inflation protection, credit risk, risk of municipal securities, derivatives risk, securities lending risk, call risk, liquidity risk, income risk. Value investment risk. Investing strategy risk. To more fully understand the risks related to investment in the funds, investors should read each fund’s prospectus. Investments in foreign issuers are subject to certain considerations that are not associated with investment in US public companies. Investment in the International Equity, Emerging Markets Equity and the Global Fixed Income Portfolios and Indices will be denominated in foreign currencies. Changes in the relative value of these foreign currencies and the US dollar, therefore, will affect the value of investments in the Portfolios. However, the Global Fixed Income Portfolios and Indices may utilize forward currency contracts to attempt to protect against uncertainty in the level of future currency rates (if applicable), to hedge against fluctuations in currency exchange rates or to transfer balances from one currency to another. Foreign Securities prices may decline or fluctuate because of (a) economic or political actions of foreign governments, and/or (b) less regulated or liquid securities markets. The Real Estate Indices are each concentrated in the real estate industry. The exclusive focus by Real Estate Securities Portfolios on the real estate industry will cause the Real Estate Securities Portfolios to be exposed to the general risks of direct real estate ownership. The value of securities in the real estate industry can be affected by changes in real estate values and rental income, property taxes, and tax and regulatory requirements. Also, the value of securities in the real estate industry may decline with changes in interest rate. Investing in REITS and REIT-like entities involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITS and REIT-like entities are dependent upon management skill, may not be diversified, and are subject to heavy cash flow dependency and self-liquidations. REITS and REIT-like entities also are subject to the possibility of failing to qualify for tax free pass through of income. Also, many foreign REIT-like entities are deemed for tax purposes as passive foreign investment companies (PFICs), which could result in the receipt of taxable dividends to shareholders at an unfavorable tax rate. Also, because REITS and REIT-like entities typically are invested in a limited number of projects or in a particular market segment, these entities are more susceptible to adverse developments affecting a single project or market segment than more broadly diversified investments. The performance of Real Estate Securities Portfolios may be materially different from the broad equity market. Fixed Income Portfolios: The net asset value of a fund that invests in fixed income securities will fluctuate when interest rates rise. An investor can lose principal value investing in a fixed income fund during a rising interest rate environment. The Portfolio may also be affected by: call risk, which is the risk that during periods of falling interest rates, a bond issuer will call or repay a higher-yielding bond before its maturity date; credit risk, which is the risk that a bond issuer will fail to pay interest and principal in a timely manner. Risk of Banking Concentration: Focus on the banking industry would link the performance of the short-term fixed income indices to changes in performance of the banking industry generally. For example, a change in the market’s perception of the riskiness of banks compared to non-banks would cause the Portfolio’s values to fluctuate. The material is solely for informational purposes and shall not constitute an offer to sell or the solicitation to buy securities. The opinions expressed herein represent the current, good faith views of Lake Tahoe Wealth Management, Inc. (LTWM) as of the date indicated and are provided for limited purposes, are not definitive investment advice, and should not be relied on as such. The information presented in this presentation has been developed internally and/or obtained from sources believed to be reliable; however, LTWM does not guarantee the accuracy, adequacy or completeness of such information. Predictions, opinions, and other information contained in this presentation are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Any forward-looking statements speak only as of the date they are made, and LTWM assumes no duty to and does not undertake to update forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward looking statements. No investment strategy can guarantee performance results. All investments are subject to investment risk, including loss of principal invested. Lake Tahoe Wealth Management, Inc.is a Registered Investment Advisory Firm with the Securities Exchange Commission. #MarketandEconomicCommentary

You may be surprised that almost half of Medicare beneficiaries do not review or even compare their coverage options each year during open enrollment.1 Navigating the Medicare landscape can be challenging, and it’s easy to overlook when there are more engaging tasks at hand. However, ensuring you have the most suitable coverage each year is vital. Here are four compelling reasons why all Medicare beneficiaries should make it a priority to review their Medicare selections annually. #1. Medicare Benefit Changes Medicare benefits can change due to changes in the health care industry, regulations, and other external pressures. Deductibles, prescriptions, and premiums can be affected by inflation and doctor and specific drug availability may change. One good example of change is in 2023 vaccine coverage became more comprehensive and the cost of insulin was capped at $35/month for Medicare beneficiaries. (Part of the Inflation Reduction Act, which also allowed Medicare to negotiate the price of certain prescription drugs over the next few years.) #2. Life Changes Lifestyle changes can affect the value of your coverage. Maybe you have moved or plan to travel internationally, or you are now interested in finding out more about vision and dental plan coverage. If you are now subject to Required Minimum Distributions, they may impact your Medicare premiums. #3. Health Changes Your health status is not static. A new diagnosis / condition may call for a change in coverage. An injury or fall during the year may mean more upcoming doctor visits and tests. Or a new diagnosis may equate to more prescriptions or seeing a specialist. As your anticipated health care needs change you will want to make sure your treatment is covered as cost efficiently as possible. #4. Health Care is a Significant Expense in Retirement The Medicare plan you select will impact the total amount you spend on health care. It impacts everything from premiums, to co-pays, to out-of-pocket totals for unforeseen health care needs. You will want to consider the trade-off between a tighter cap on potential costs versus smaller up-front costs. Additionally, changes in income can impact your cash outlay. Medicare coverage should be aligned with your health needs while also considering your financial goals. We Will Review Your Options Together Reviewing your Medicare options annually is a crucial step in ensuring that your healthcare coverage aligns with your changing circumstances. Whether it’s adjusting to Medicare benefit changes, adapting to life changes, responding to shifts in health status, or managing healthcare expenses in retirement, an annual review empowers you to make informed choices. If you have questions or need assistance with your Medicare selection, Lake Tahoe Wealth Management offers valuable resources to help you align your choices with your life and financial plan. 1 Kaiser Family Foundation Study, “More Than Half of All People on Medicare Do Not Compare Their Coverage Options Annually,” Nov. 1, 2022, https://www.kff.org/medicare/issue-brief/more-than-half-of-all-people-on-medicare-do-not-compare-their-coverage-options-annually/