Walz and Vance: Two Distinct Financial Strategies for VP Candidates
According to the Federal Reserve, a record 58% of Americans held stocks in 2022.
However, Democratic vice presidential nominee Tim Walz was not among them, as indicated by his financial disclosures.
Walz’s financial profile shows minimal investments, with no stocks, bonds, homes, or real estate listed. His assets primarily involved pensions, whole life insurance, and a college savings account, as per a 2019 filing. In 2022, he and his spouse, Gwen, reported earnings of $166,719 before taxes.
On the other hand, J.D. Vance, the Republican vice presidential candidate, has a diverse portfolio that includes stocks, real estate, and cryptocurrency.
What do financial experts think about the contrasting investment strategies of these candidates?
“Their different approaches likely stem from their generational differences and financial goals relevant to their respective life stages,” said Daniel Razvi, COO at Higher Ground Financial Group.
“J.D. Vance is still relatively early in his professional journey,” Razvi explained. “Being younger, he has more potential for income and asset growth. In contrast, Tim Walz is approaching retirement age, leading to common concerns about ensuring financial stability in later years.”
Furthermore, Vance has a larger financial capacity for investments. He is a bestselling author, a venture capitalist managing Narya, his startup-focused venture capital firm established in 2020, and serves as junior senator from Ohio. Walz, previously a high school teacher, transitioned into a career as a U.S. Congressman and later became the governor of Minnesota.
Surprising Lack of Stock and Property Ownership by Walz
Some financial consultants expressed surprise at Walz’s investment choices.
“I’m astonished,” remarked Eric Bond, an adviser at Bond Wealth Management based in Long Beach, California. “There’s no investment strategy advocating for generational wealth without saving, investing in stocks, or purchasing homes.”
By not investing in stocks or properties, advisers point out that Walz could be missing out on significant opportunities to grow his wealth and create a legacy for future generations.
- Since the early ’90s through May 2024, the S&P 500 stock index has seen returns exceeding 1,300%, while the S&P CoreLogic Case-Shiller U.S. National Home Price Index has seen an increase of more than 320%, effectively quadrupling.
- Government bonds typically offer lower yields but are also considered less risky as they are backed by the federal government. Investors in bonds secure a certain yield over a specified period and receive their principal back at maturity.
- Financial advisors often recommend a “classic” investment portfolio of 60% stocks for growth and 40% bonds for income.
Evaluating the Positive Aspects of Walz’s Finances
Walz’s net worth is estimated to be between $112,003 and $330,000. Here’s a summary of what advisers appreciate about his financial choices:
- He holds two whole life insurance policies valued between $15,000 and $50,000 each. He contributed to the policies’ values consistently until at least 2013, as reported by CNBC.
“Investing in life insurance can be a sound strategy,” stated Dan Casey, investment adviser and founder of Bridgeriver Advisors. “It’s tax-free growth and you can withdraw funds without tax implications while providing benefits for your wife and children.”
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A tax-deferred 529 education savings plan worth $1,000 to $15,000, likely meant for his two children, Hope, 23, and Gus, 17.
“It’s commendable that they have taken the initiative to invest,” Bond remarked, adding that 529 accounts can be transferred to another child or converted into a Roth IRA.
Advisers Identify Possible Downsides
Advisers also pointed out some potential negatives in Walz’s financial strategy, including:
- The sale of his family’s home in 2019 for over $300,000, which was more than double the purchase price from 1997, before moving into the governor’s mansion.
If Walz had retained the property and rented it out, he could have generated rental income and claimed annual depreciation as tax deductions for over 27 years, Bond explained. Additionally, upon his passing, his heirs could have sold it without incurring capital gains tax due to the property’s value resetting to market value.
Nevertheless, Bond recognized that not everyone aspires to be a landlord, particularly if
While managing a state, it’s plausible that Walz sold his house and benefited from tax deductions allowed by the IRS, which permits joint filers to exclude up to $500,000 of profit from their taxable income, he mentioned.
“So what did he do with the money?” he questioned. “If you’re not keen on real estate, you could invest it in stocks, bonds, or anything else.”
- He has various pensions, which an analysis from the Wall Street Journal suggests could increase the Walz family’s net worth by around $800,000.
Pensions, known for their rarity these days, provide guaranteed monthly payments for life, ensuring a level of financial security. However, there are important financial aspects to consider.
“Taxes are my main worry,” Razvi indicated. “When he receives the payments, they’ll be taxed, and he won’t have much flexibility at that moment since government pensions can’t be converted to Roth accounts.”
Pension payouts are taxed as income, typically at a higher rate than capital gains tax for money withdrawn from a brokerage account, he explained.
Roth accounts are financed with money that’s already been taxed, allowing for tax-free withdrawals. On the other hand, traditional retirement accounts like 401(k)s or pensions utilize pre-tax funds and incur taxes upon distribution.
Additional uncertainties include issues of liquidity and inheritance. While pensions provide steady monthly income, they can’t be tapped for larger expenses like long-term healthcare or assistance with a child’s home purchase, as Bond noted. In contrast, funds in 401(k)s, brokerage, or IRA accounts can be withdrawn as necessary.
Pensions also typically do not get passed down to beneficiaries, unless specifically arranged, and even then the benefit is usually reduced, according to Bond.
- In 2009, Walz liquidated investments valued between $1,001 and $15,000 across two Roth IRAs. He and his spouse, Gwen, also sold similar investments from her two Roth IRAs. These IRAs do not appear in Walz’s later House disclosures, indicating they were likely cashed out, as reported by CNBC.
This decision puzzled some financial experts. Generally, withdrawing from a Roth IRA is seen as “the last resort,” Casey remarked. “You would do anything to avoid cashing in your retirement savings. A Roth is incredibly valuable” because it allows for tax-free growth and withdrawals during retirement.
How do Walz’s financials compare with Republican VP candidate Vance’s?
In contrast, Republican vice presidential candidate JD Vance has a significantly different financial profile, showcasing a varied investment approach and a net worth estimated at up to $10 million, according to Forbes Magazine. Here are highlights from Vance’s disclosures:
- He owns stock in over 100 companies, as revealed in financial disclosures from his time as a U.S. senator. In 2022, this included shares in Walmart as well as other private firms.
- In 2022, he earned $121,376 in book royalties from his bestseller “Hillbilly Elegy.”
- He holds cryptocurrency valued between $100,001 and $250,000.
- In 2022, he received rental income ranging from $15,001 to $50,000 from a rowhouse in Washington, D.C.
- Vance has various other investments, including multiple bank accounts, certificates of deposit, and ETFs linked to a variety of assets like the S&P 500, Dow, Treasuries, gold, and oil.
- He also possesses multiple homes, retirement accounts, and three college savings accounts, as stated by the Wall Street Journal.
- As a U.S. senator, he earns an annual salary of $174,000, per the National Taxpayers Union Foundation.
For individuals with available funds for investment, advisors suggest that Vance’s strategy exemplifies effective diversification.
While Vance’s venture into cryptocurrency may seem quite speculative, Casey noted that “he has enough assets that crypto isn’t a significant portion of his overall portfolio.”
Moreover, advisors emphasize that Vance’s risk appetite corresponds to his age; he is 40 years old, whereas Walz is 60.
Vance is “still in the phase of building wealth and exploring different investment strategies,” Razvi explained. “As he nears retirement, he may prefer to adopt a more stable approach.”
