How Political Unrest May Impact a Portfolio

Investing in the financial markets requires a keen understanding of global events. Among these, political unrest counts as a significant factor that may influence an investment portfolio. Understanding the potential implications may help investors create a strategy to safeguard their investments and possibly take advantage of arising opportunities.

Geopolitical risks and the financial market

Political instability and unrest can breed uncertainty in the financial markets. Geopolitical risks are typically associated with changes in:

• A country's political system or government
• Fluctuations in foreign policy
• Political violence
• Threats of such disruptions

An environment of political unrest often prompts investors to reassess and sell off investments with assumed risk, driving price fluctuations in equities, bonds, commodities, and currencies.

Direct impact on the investment portfolio

The influence of political unrest can be direct or indirect on a portfolio. For instance, if direct investments in a country experiencing political instability are represented in the portfolio, the value of the assets may decline as investors liquidate these holdings and move toward less risk-averse assets.

• Equities - Stocks or equities tend to be adversely affected in times of political turmoil. As investor confidence wanes, stock prices may drop significantly.
• Bonds - Political instability can impair the country's ability to repay its debts, leading to lower credit ratings and higher yield requirements, thereby reducing bond prices.
• Commodities - Certain commodities, like gold, often rise during political unrest as investors seek safe havens. Conversely, commodities tied to that country's economy might experience sharp price declines.
• Currencies - The domestic currency of the affected country usually depreciates due to a withdrawal of foreign investment and reduced confidence in the country's economy.

Indirect impact on the investment portfolio

Political unrest doesn't only affect the specific area of unrest; spillover effects often influence global markets. For instance, political unrest in a major oil-producing country can drive global oil prices higher, affecting sectors in the portfolio such as transportation, manufacturing, and energy.

The role of global diversification

One strategy to mitigate the impact of political unrest on a portfolio is through global diversification. By spreading investments across different geographical locations, countries, or sectors, a portfolio's risk may be reduced.

The importance of a long-term investment strategy

While political unrest can lead to short-term market volatility, it's important not to lose sight of one's long-term investment goals. History has shown that markets typically recover from political disturbances over the long term. A balanced, diversified portfolio and a long-term investment strategy may be an appropriate defense against the uncertainties of political unrest.

Political unrest can affect one's investment portfolio in various ways, both direct and indirect. However, by understanding these dynamics, diversifying investments, and maintaining a long-term view, navigating geopolitical risks as a portfolio protection strategy may be appropriate. Now may be a suitable time to meet with a financial professional to review your portfolio's holdings.

2025-2026 Tax Season: New Deductions and Required Forms for Filing

The passage of the federal One Big Beautiful Bill in 2025 dramatically affects business and personal income taxes, as well as payroll W-2 reporting for 2025. While many deductions and credits remain the same, the following are notable changes that may impact those with the following situations:

Tips and overtime income - If you have W2 tip income or overtime income, there should be data in W2 Box 14 or a supplemental notice from the employer regarding qualifying amounts related to these 2 specific items:

Tips - deduction of up to $25,000 per taxpayer with phaseout for Modified Adjusted Gross Income (MAGI) over $150,000 (over $300,000 for Married Filing Jointly).

Working overtime - deduction of up to $12,500 per taxpayer with phaseout for MAGI over $150,000 (over $300,000 for Married Filing Jointly).

Social Security recipients - There is an additional $6,000 per-person senior Social Security deduction for 2025 – 2028 for those age 65 and older, with a phaseout for MAGI over $75,000 (over $150,000 for Married Filing Jointly). For those receiving Social Security, this is a favorable change that may help reduce income taxes.

Child Tax Credit - The child tax credit increases to $ 2,200 for dependents under age 17. Over 17 remains at $500.

529 plans - 529 plan tax considerations have been modified; reach out to a financial or tax professional for clarification.

State and Local Tax (SALT) - The Schedule A SALT cap deduction increases to $40K – the combined property tax and state income taxes that can apply toward itemized deductions. There may be other miscellaneous deductions includable depending on your situation.

New vehicle deduction – A qualifying new vehicle deduction of $10,000 for interest paid on a loan for a new vehicle assembled in the United States and purchased in 2025 may apply. The bill of sale will be required, along with documentation of the interest paid.

Cryptocurrency/digital assets – Investors must report selling or using digital assets to pay for a transaction. These asset sales have always been taxable; however, include the form for filing 2025 taxes.

Home Energy Efficiency - Energy efficiency home improvement credits end in 2025. If a new furnace, A/C, boiler, heat pump, water heater, woodstove, windows, doors, insulation, solar, or battery storage was installed, provide a copy of the invoice for filing purposes.

Required forms for filing

Below are some of the documents that may be needed to file 2025 income taxes, depending on one's situation:

• W-2 for wages
• 1099-Int for interest
• 1099-DIV for dividends
• 1099-B Brokerage
• SSA-1099 Social Security  
• 1099-NEC for income
• 1099-Misc for income
• 1099-K for income
• 1099-R for retirement income
• 1099-G for refunds & unemployment
• 1099-Int for mortgages 
• 1098-T for tuition
• 1099-SA for HSAs
• K-1 forms from investments in S corporations or partnerships
• Form 5498 for IRA values
• Form 1098-VLI for new car loan interest
• For 1099-DA for digital assets
• IRA and Roth IRA contributions for 2025
• Childcare costs, and the name, address, amount, and Tax ID # of the recipient
• Charitable donations: total amounts and recipients
• Property tax paid on primary residence
• Estimated tax payments and dates
• Any letters received from the IRS or state tax authorities       

The IRS officially began accepting 2026 tax season returns on Monday, January 26, 2026, with the filing deadline of Wednesday, April 15, 2026. If you have any questions regarding investments, securities, purchases, or deductions specific to your situation, contact a financial or tax professional for further information before filing.

Pre-Wedding Planning: 8 Tips for Financial Bliss

For those preparing to wed, planning their future finances together may help strengthen their relationship. Marriage is not just a romantic commitment but also a financial partnership.

Here's a guide to help those preparing to ‘tie the knot’ work toward financial bliss before the marriage vows are exchanged.

Tip #1 – Engage in open conversations.

Transparency is key to an independent future. Both partners should share their income details, assets, liabilities, and financial obligations. Discuss short-term and long-term financial goals, which might include:

• Saving for a vacation
• Buying a home
• Planning for a family
• Preparing for retirement

Being open about these matters will help to align financial dreams and expectations.

Tip #2 - Prepare a joint budget.

Track income and expenses to help understand each partner's overall financial health. Consider lifestyle changes that could affect the monthly budget, such as moving to a new city or starting a family. The budget should reflect this and other factors, such as:

• Fixed expenses: Rent or mortgage, utilities, insurance, etc.
• Variable expenses: Groceries, entertainment, travel, etc.
• Savings: Emergency fund, retirement savings, other goals

Joint budgeting not only helps manage household expenses but also helps both partners understand they are on the same page about financial habits and future goals.

Tip #3 – Draft a debt management plan.

Coming into a marriage with debt, be it student loans, credit card debt, or personal loans, is common. It's important to discuss how to tackle these debts openly. The couple may want to consider:

• Prioritizing high-interest debts
• Creating a repayment plan
• Considering debt consolidation or refinancing options

A debt management plan can help reduce financial stress and build a strong financial foundation.

Tip #4 – Set up a household emergency fund.

An emergency fund is an essential part of any financial plan. It provides a safety net in case of unforeseen events such as job loss, unexpected medical bills, or major repairs. Aim to save enough to cover 3-6 months of living expenses.

Tip #5 – Plan and save for retirement.

Start planning for retirement early, since the sooner one starts investing, the more time one's money has to grow. Consider these retirement savings options:

• Employer-sponsored retirement plans like 401(k)s, 403(b)s and other plans
• Individual Retirement Accounts (IRAs and Roth IRAs)
• Pensions and Social Security benefits
• Annuities

Tip #6 – Evaluate insurance needs.

Insurance is an essential tool in protecting one's financial health. Evaluate insurance needs and consider several types of insurance:

• Health insurance to cover medical expenses
• Life insurance to provide for each partner in case of untimely death
• Homeowner's or renter's insurance to protect property
• Auto insurance for vehicles

The type and amount of insurance needed will vary based on circumstances as a couple.

Tip #7 – Schedule regular financial check-ins.

Lastly, regularly review and adjust the household financial plan to accommodate life changes and financial goals. Whether it's an annual check-in or a quarterly review, keep the lines of communication open.

Tip #8 – Work with a financial professional

It’s essential to work with a financial professional who can review each partner’s progress toward goals while accounting for each partner’s financial situation. Remember, preparing for marriage takes teamwork, commitment, and regular conversations about finances to align goals as you work toward an independent future together. 

A Tax Treatment Primer: Roth IRA vs. Traditional IRA

It’s paramount to understand the tax treatment of the various types of retirement accounts upon distributions. Roth IRAs and Traditional IRAs each have different tax implications and features that impact one's retirement strategy.

Understanding Roth IRAs

Roth IRAs offer tax-free growth and tax-free withdrawals in retirement. It is funded with after-tax dollars, meaning there are no tax deductions for contributions. However, this sets up the benefit of tax-free retirement income in the future. Here are things investors must know about Roth IRAs:

• Non-deductible contributions— Roth IRA contributions are made with after-tax dollars and are therefore not deductible on an income tax return.
• Tax-free growth— The investments in a Roth IRA grow tax-free, and the owner will not owe any taxes on dividends, interest, or capital gains—allowing for compound growth without tax implications.
• Tax-free withdrawals— Qualified withdrawals from a Roth IRA are tax-free as long as the account has been open for at least 5 years and the account owner is age 59½ or older.

Traditional IRAs

A Traditional IRA is a tax-deferred retirement account, meaning contributions may be tax-deductible. Contributions may reduce one's taxable income for the year in which they are made. Here are some of the key points regarding Traditional IRAs:

• Tax-deductible contributions— By contributing to a Traditional IRA, you will be able to deduct that amount from your income, bringing down your overall tax liability for that tax year.
• Deferred taxes on growth— Investments in a Traditional IRA grow tax-deferred, meaning taxes will not be due on dividends, interest, or capital gains until withdrawals begin.
• Taxable withdrawals—When beginning to withdraw money from a Traditional IRA, the withdrawals are treated as regular income and are therefore subject to income tax at the then-current tax rate.

Tax treatment comparison

Comparing the tax treatment of the Traditional IRA and Roth IRA can provide key insights into which account may be most suitable for your specific circumstances. It's vital to consider the following:

• High tax bracket—For individuals who expect to be in a higher tax bracket in retirement, a Roth IRA may be more beneficial, as withdrawals are tax-free.
• Lower tax bracket— For those who expect to be in a lower tax bracket during retirement, the Traditional IRA—with its tax-deductible contributions—may be more advantageous.

In conclusion, the choice between a Traditional IRA and a Roth IRA largely depends on your current tax situation, future tax expectations, and goals for retirement. Therefore, consult a financial and tax professional to discuss which investment vehicle is appropriate for your unique circumstances. 

Investment advisory services are offered through Wealth Watch Advisors, an SEC-registered investment advisor. Neither Wealth Watch Advisors or J. Martin Wealth Management, LLC are endorsed by the Social Security Administration or any other governmental organization. Note, registration with the SEC does not denote a certain skill level or guarantee the success of an investment strategy. Wealth Watch Advisors and J. Martin Wealth Management, LLC are independent of one another.