New Year Resolutions for Your Personal Finance

New Year Resolutions for Your Personal Finance

In this issue:

• Latest in Retirement Savings & Personal Finance
• New Year Resolutions for Your Personal Finance
• MyPlanIQ 2026 Market Outlook 

Latest in Retirement Savings & Personal Finance

Tax Reductions in 2026

Here are some key tax reductions for the new year, mostly tied to the “One Big, Beautiful Bill Act”. See this article for more details:

• Standard deduction increases (tax year 2026):
  $16,100 for single filers (and married filing separately), $32,200 for married filing jointly, and $24,150 for head of household.
  Impact: reduces taxable income dollar for dollar for taxpayers who take the standard deduction, which is most filers.
• Wider income tax brackets (inflation adjustment):
  The IRS adjusted bracket thresholds to reduce “bracket creep.”
  Impact: if your income rises mainly with inflation, more of your income may stay in lower marginal brackets than it otherwise would. 
• Alternative Minimum Tax (AMT) exemption increases:
  $90,100 for unmarried individuals (phaseout begins at $500,000) and $140,200 for married filing jointly (phaseout begins at $1,000,000).
  Impact: fewer higher income households may be pulled into AMT relative to prior thresholds. 
• Estate and gift basic exclusion amount:
  $15,000,000 for decedents who die during 2026 (up from $13,990,000 for 2025).
  Impact: fewer estates owe federal estate tax, and more wealth can pass tax free before estate tax applies. 
• “No federal income tax on tips” provision :
  Impact: reduces taxable income for eligible tipped workers, which can raise after tax take home pay, depending on each worker’s situation and eligibility rules.
• Expanded SALT Deduction Cap
  The cap on state and local tax (SALT) deductions rose dramatically from $10,000 to $40,000 beginning in 2025 and remains elevated, subject to income phaseouts. This change primarily benefits taxpayers in high-tax states who itemize deductions.
• Senior deduction:
  A $6,000 federal tax deduction for taxpayers age 65 and older tied to Social Security income.
  Impact: lowers taxable income for eligible seniors, subject to the specific eligibility and any phaseout rules. 

Identity Theft Prevention: Lock Your Brokerage Accounts and Freeze Your Credit

One effective way to fight identity theft is to lock your brokerage and investment accounts. Many brokerage firms now offer account lockdown or trading lock features that prevent unauthorized transactions, transfers, or account changes. When enabled, these locks block actions such as selling securities, moving funds using ACH, or updating linked bank accounts unless you manually unlock the account. This is especially important for long-term investors who trade infrequently, since a lock significantly reduces the risk of fraudulent liquidations or withdrawals if your login credentials are compromised.

Another critical protection is placing a credit freeze with the major credit bureaus. A credit freeze prevents lenders from accessing your credit report, which stops criminals from opening new credit cards, loans, or lines of credit in your name. Unlike fraud alerts, a credit freeze offers stronger protection and remains in place until you remove it using a secure PIN or account login. Credit freezes are free and do not affect your credit score, making them one of the most effective defenses against identity theft related to new account fraud.

For your loved ones or senior citizens, the above are some practical and effective methods to fight against frauds!

New Year Resolutions for Your Personal Finance

Another year passed, a little gain here, a little loss there. Most of us want the same thing, save more, invest better, stop the leaks. So keep it simple and do the basics that actually move the needle.

1. Save More

Set a budget and live under it. Not perfect, just steady. Automate savings, check once a month, adjust if needed. Progress beats perfection.

2. Invest More

• Use the company 401(k), at least to the match. This is Free money you shouldn’t miss!
• Fund an IRA, traditional or Roth depending on taxes. 
• Roth IRA gives gains free from tax for life! What’s not to like. If it’s possible, do a mega backdoor 401(k) or IRA to Roth IRA conversion!
• Then add to taxable brokerage for flexibility.

The above order makes sense. But consistency matters more.

3. Get Better Cash Yield

• Move idle cash to a high-yield savings account.
• Use short-term Treasury ETFs like USFR (WisdomTree Floating Rate Treasury Fund)  or BIL (SPDR Bloomberg 1-3 Month T-Bill ETF) for cash in brokerage. These ‘money market’ ETFs beat 99% of bank savings rates!
• Keep an emergency fund liquid, not in stocks.

4. Track Spending, The Small Leaks

Car costs, phone plans, subscriptions, eating out, travel. The small stuff adds up fast. Track it simply and cut what you do not use.

5. Pay Off Credit Card Debt

High interest debt is a drag on everything. Stop adding balances to a card to which you already paying ultra high interest! Pay more than the minimum, focus on the highest rate first. This is the priority.

6. Lower Expectations, Just Do It

Most resolutions fail because they are too big. Make it small and doable. Save a bit more, invest a bit more, cut a few leaks. Small actions compound. Start now and let it build. You’ll be pleasantly surprised, guaranteed!

Happy New Year. One step at a time is still a plan.

MyPlanIQ 2026 Market Outlook

The following is an excerpt from our latest premium newsletter. Enjoy! 

We will try our crystal ball for the new year, just to satisfy some of our readers’ curiosity.

We see that there are three major factors that can affect the equity and bond markets in 2026.

Low Interest Rates

The first factor is the low interest rate environment expected in 2026. The Trump administration has indicated that it will aggressively pursue a low interest rate policy. It is likely to nominate the next Federal Reserve Chair, possibly as soon as this week, who would be more aligned with the administration’s monetary stance. As a result, short-term interest rates are likely to remain low.

In addition, the administration has signaled a willingness to implement fiscal stimulus, as evidenced by the so-called $2,000 tariff-related cash distribution. In general, an ultra-low rate environment would be positive for both equity and bond markets.

One key uncertainty is whether long-term interest rates will decline. This is particularly important for the housing market, as mortgage rates are closely tied to long-term Treasury yields. If mortgage rates do not fall meaningfully, the housing market could remain sluggish, as it was in 2025. If that occurs, we believe the Trump administration could adopt QE-style measures to purchase long-term Treasury bonds in order to suppress long-term rates, or implement similar policies. However, this remains speculative at this point.

AI Bubble

The second major factor is the so-called AI bubble thesis, proposed by investors such as Michael Burry and others. The argument is that current AI data center spending has become highly speculative. Estimates suggest that roughly $3 trillion could be spent over three years to build AI infrastructure, drawing comparisons to the overinvestment seen during the dot-com bubble around 2000.

As we noted in a previous newsletter, a bursting of this bubble could potentially trigger an economic recession. Given the extremely high valuations in today’s stock market, a correction could be very severe if such a bubble were burst.

Our own research and anecdotal experience, however, have been more positive. According to a recent Harvard University study, current generative AI has delivered approximately a 1.2 percent productivity improvement. This translates into roughly $400 to $500 billion in annual GDP gains. Even assuming no further improvements, sustained productivity gains at this level could offset much of the $3 trillion investment. For example, even if half of that investment were wasted, or $1.5 trillion, the cumulative productivity gains over several years could roughly match that amount. Of course this is just a straw man argument. 

Our experience suggests that generative AI has already reduced a substantial amount of low-level digital work, including programming, coding, writing, research, and other information-based tasks. We also believe that so-called agentic applications, where AI performs autonomous actions within workflows, particularly in enterprise and consumer applications such as e-commerce and personal finance, still have significant room to expand.

Importantly, these gains do not require artificial general intelligence or AGI, a holy grail everyone has been talking about these days. Current technology is already sufficient to deliver meaningful productivity improvements in specialized use cases. Workflow automation and partial automation through AI agents are likely to be a major focus for AI companies in 2026. If these productivity gains materialize before AI adoption becomes saturated, the risk of AI overinvestment may be less severe than it appears.

Beyond digital AI, physical artificial intelligence such as robotics, self-driving systems, industrial robots, and humanoid robots developed by Tesla and other firms represents a longer-term opportunity. Physical AI could address labor gaps in sectors requiring physical activity, including manufacturing, healthcare, and aerospace. Whether physical AI can materially impact the economy before digital AI matures or saturates remains uncertain. That said, we believe certain applications, particularly industrial robotics and robotaxis, could become commercially viable as early as 2026.

Inflation

Inflation has been trending downward in recent months, but concerns remain around tariff-induced inflation. There are two likely scenarios.

In the first scenario, tariff-related price increases are largely one-time adjustments. Once prices reset, inflation would spike temporarily and then stabilize. In the second scenario, the Trump administration continues to exercise discretion and flexibility in its tariff policies. It has already begun reducing tariffs on certain everyday consumer goods. This policy flexibility could serve as an additional tool to manage inflationary pressures.

Overall, while inflation may remain a short-term concern, the combination of aggressive policy measures, flexibility in tariff implementation, and the one-time nature of many tariff effects suggests that inflation is unlikely to be a major structural issue in 2026.

To summarize, we believe there are still some positive aspects for both the economy and the financial markets in 2026. However, as we have consistently noted, the current extreme stock market valuations, along with excessive government borrowing and rising debt levels, remain significant risks to both the financial markets and the broader economy. These risks, when combined with the ongoing frenzy in the AI sector, could pose an additional and potentially substantial threat.

Fortunately, we do not rely on crystal ball predictions for our investments. We just need to stay the course which is guided by well-defined and sound strategic and tactical strategies.

The following table shows the major asset price returns and their trend scores, as of last Friday:

More detailed returns and trend scores can be found on MyPlanIQ.com Market Overview.