Weekly Market Notes – October 16, 2017

Weekly_Market_Notes

For the Week of October 16, 2017

The Markets

After several upbeat economic reports buoyed investor confidence, the three indexes rose, and the Dow and S&P 500 saw their fifth week of gains. Data revealed retail sales rose in September; consumer prices increased; and inflation remained muted. According to a University of Michigan report, consumer sentiment was the highest since January 2004. For the week, the Dow rose 0.43 percent to close at 22,871.72. The S&P gained 0.17 percent to finish at 2,553.17, and the NASDAQ climbed 0.24 percent to end the week at 6,605.80.

Returns Through 10/13/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.43 17.92 29.54 14.76 14.22
NASDAQ Composite (PR) 0.24 22.71 26.71 16.17 16.76
S&P 500 (TR) 0.17 15.86 22.21 13.20 14.72
Barclays US Agg Bond (TR) 0.48 3.48 0.85 2.48 2.10
MSCI EAFE (TR) 1.63 21.84 24.41 7.35 8.68

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

The World’s Biggest — The U.S. economy was $19.25 trillion in size as of June 30, 2017. Ten years ago (2007), the economy was worth $14.48 trillion. Twenty years ago (1997), it was worth $8.61 trillion. Thirty years ago (1987), it was worth $4.87 trillion (source: Commerce Department, BTN Research).

High After High — During its 103 month-long bull market, the S&P 500 has set 169 all-time record closing highs including its most recent on Thursday, Oct. 5, its sixth in the last seven trading days (source: BTN Research).

Rollin’ On — The S&P 500 gained 4.5 percent (total return) during the third quarter of 2017, its eighth consecutive gain in a quarter. It also marked the 18th of the last 19 quarters that have produced a total return gain (source: BTN Research).

 

WEEKLY FOCUS – The Start of Medicare Open Enrollment

Because Medicare Advantage and drug plans change from year to year, recipients should carefully review and compare policies during Open Enrollment (October 15 – December 7). It’s important to make sure their doctors and hospitals are in network, verify regular prescriptions are covered and check the policy ratings using the Medicare five-star ratings system inside the Medicare Plan Finder tool at Medicare.Gov.

During this time, enrollees have these options regarding their 2018 coverage:

  • Keep their current medical and drug coverage.
  • Switch their Advantage plan (a private plan that replaces Medicare Parts A and B, and usually includes a Part D drug plan).
  • Switch from original Medicare to an Advantage plan or vice versa.
  • Sign up for, drop or switch a Part D plan.

Enrollees can’t or may not be able to…

  • Use Open Enrollment to enroll in Medicare Part A (hospital insurance) and/or B (medical insurance) for the first time.
  • Buy or switch a Medigap plan (a private policy covering co-payments and deductibles not covered by original Medicare). Although federal law prohibits Medigap providers from rejecting an applicant with pre-existing health conditions during the six-month period surrounding their birthday, they may turn these individuals down later or charge them higher premiums.

Good and bad news. Expect increased costs for Part D. The initial deductible will increase $5; the initial coverage limit will increase $50; and the out-of-pocket threshold will increase $50. Expect better security. Medicare will stop using Social Security numbers for identification and will begin issuing new ID cards with Medicare beneficiary identifiers instead of Social Security numbers in April of 2018. This will allow seniors to protect their identity by not carrying or providing Social Security numbers unnecessarily.

Medicare premiums and other healthcare costs will continue to increase as a percentage of retirees’ living expenses. Contact our office for help in determining if your existing plan for your retirement allows sufficient funds for these expenses.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright October 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 1923451.1

Two Crucial Estate Planning Steps

National Estate Planning Awareness Week is October 16 – 22, 2017

Making sure you have a will and a financial power of attorney are two crucial steps in the estate planning process.

Deciding how you want to be remembered after you’re gone can be one of the most important decisions you make. Do you want your legacy to be judged by your entire life or by a bitter legal battle over your assets? People often avoid the issue of death, but in the case of estate planning, it’s really about focusing on life. You’re no doubt proud of your accomplishments in life, no matter what they may be. Your children, your career or your impact on others’ lives – these are the types of things that should be remembered.

Estate planning remains one of the ways you can protect yourself and your loved ones after you’re gone. With the proper techniques and planning, you can help ensure that you’re remembered for the impact you had on your community and your world. In the event of an accident or other medical emergencies, you should be prepared.

In addition to a medical power of attorney and a living will, which spell out what medical treatments you wish to have in the event of an emergency and who will speak for you, you should prepare a will and a financial power of attorney. These financial documents will save your family from much of the heartache and hurt feelings that go with dividing up estates and making financial decisions.

While most Americans are familiar with wills, many still do not have them. Wills can be as complex or as simple as you wish and can directly spell out who you want to receive your assets after your death. As part of creating your will, you will choose an executor, the person who will ensure the stipulations of your will are carried out. Your executor should be financially savvy and have the energy and ability to carry out your wishes.  A family member isn’t always the best choice, and you may want to consider appropriate alternatives. We can help you explores these options.

A financial power of attorney grants the responsibility for the financial decisions regarding your estate. You choose who you designate as your representative. Your financial power of attorney can also be your medical power of attorney, but it doesn’t have to be. In many cases, your spouse is both, however, it’s important to name a back-up, in case your spouse is also injured or passes away.

Wills and a financial power of attorney, along with a living will and a medical power of attorney, make up the four basic documents and preparations of estate planning. They are, however, only a few of the many options you have when it comes to deciding what your legacy will be. Trusts, insurance and other options exist, as well as several other tax strategies that can be utilized in your estate. We can help in planning the entire process.

If you have these documents in place, please review them every few years to ensure they still match your wishes.  If you do not have these documents done, please don’t wait – make them a priority.

Weekly Market Report – October 9, 2017

Weekly_Market_Notes

For the Week of October 9, 2017

The Markets

After the Labor Department’s report showed the first monthly decline in nonfarm jobs in seven years, the Dow and the S&P 500 dipped into the red. However, the NASDAQ closed higher for the ninth day and squeezed into a record close. For the week, the Dow rose 1.70 percent to close at 22,773.67. The S&P gained 1.25 percent to finish at 2,549.33, and the NASDAQ climbed 1.45 percent to end the week at 6,590.18.

Returns Through 10/6/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.70 17.42 27.78 13.08 13.64
NASDAQ Composite (PR) 1.45 22.42 24.18 13.94 16.01
S&P 500 (TR) 1.25 15.67 20.43 11.40 14.17
Barclays US Agg Bond (TR) -0.15 2.98 0.45 2.48 2.08
MSCI EAFE (TR) -0.06 19.89 19.50 5.75 7.88

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

No Drops — The S&P 500 has experienced 10 drops of at least 5 percent during its bull market run that will reach 103 months in length this week (Oct. 9, 2017) but none since Feb. 11, 2016, or 19.5 months ago (source: BTN Research).

Last Quarter of the Year — Over the past 25 years (1992-2016), the S&P 500 stock index has gained an average of 4.9 percent (total return) over the final three months of the year. Twenty of the past 25 fourth quarters (80 percent) have produced a positive total return gain (source: BTN Research).

Just One Month to Go — With just September remaining in fiscal year 2017, the budget deficit to date is $674 billion. The last five Septembers have reported a budget surplus that has averaged $76 billion. The deficit from fiscal year 2016 was $587 billion (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – Preparing Financially for Natural Disasters

If you live in a part of the country prone to natural disaster, you’re probably prepared for an emergency. Extra water, flashlights, last year’s tax returns… Wait. Tax returns?

We hear about physical preparations for natural disaster but what about financial preparations?

When disaster hits, you might only have enough time to ensure the physical safety of your family. But once the immediate danger passes, you may need a Financial Emergency Kit for the recovery process.

What are some of the things you need to include in your Financial Emergency Kit?

  • Cash and keys. Make sure there is enough ready cash for food, lodging and miscellaneous expenses. You can include an extra credit card, but cash is king during most emergencies. Pack an extra set of essential keys to cars, house and safe deposit boxes.
  • Pre-storm photos or video of your home, both inside and out.
  • A list of everything of value in and around your home, their approximate value and receipts, if possible.
  • Copies of important documents like your homeowner’s insurance policy, mortgage agreement, deeds, health care proxies, bank statements, credit card bills and information needed to file tax returns.
  • A list of telephone numbers and email addresses for family members and key medical, financial and business contacts.
  • Personal identification: You may need to confirm your identity to file for disaster relief services and insurance claims or access property and financial assets.

There are four basic steps in being financially prepared for a disaster. Gather the contents for your kit, including important documents and contact information. Review insurance policies and financial papers to ensure they are accurate and up-to-date. Make sure paper and electronic copies of all files are stored in a safe, easy-to-access location. Schedule a regular meeting for updating it; pair it with your yearly financial planning review.

Don’t wait until disaster hits. Call our office today. We can help you come up with a practical pre-disaster/storm checklist for your Financial Emergency Kit.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright October 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#1917359.1

October 2017 Monthly Outlook – Final Stretch

Fall weather has finally arrived here in New Jersey and we head into the final stretch of the year in the financial markets.

Financial Markets

  • Last Quarter of the Year — Over the past 25 years (1992-2016), the S&P 500 stock index has gained an average of 4.9% (total return) over the final three months of the year. Twenty of the past 25 fourth quarters (80%) have produced a positive total return gain (source: BTN Research).
  • Whenever the S&P 500 is positive for August and September, two of the worst months for stocks, the S&P 500 has risen for the remainder of the year 13 of 16 times, or 81% of the time (source: CFRA).  August was flat and September was up this year.
  • Investor sentiment remains neutral to negative, as you can see from this chart from AAII (American Assoc. of Individual Investors). This is a positive for stocks.
  • However, October was when the stock market plunged in 2007, 1997 and 1987,  so I remain cautious in the short-term.

10.9.2017_MONTHLY_OUTLOOK_CHART1

Economy

  • US final 2nd quarter Gross Domestic Product (GDP) was revised up to 3.1% based on solid consumer spending (+3.3%) and growth in business spending on equipment.  The employment market remains stable, although likely to decline in the short-term as a result of the storms in Houston, Florida, and Puerto Rico.
  • Rebuilding from the storms is expected to provide a boost to GDP in the fourth quarter.
  • The global economy continues to show positive signs:  China factories are growing at the fastest pace in 5 years, Japan business sentiment is the most upbeat in a decade, rapid globalization has companies such as IBM now having more employees overseas than in the US.
  • Interest rates and inflation remain low, both in the US and globally.

Outlook

  • The economy, globally, remains stable to growing.
  • Steady job growth and a positive stock market will encourage consumers to spend.
  • Monetary policy (interest rates) remains accommodative globally.
  • Consumer and corporate balance sheets remain in good shape, with a considerable amount of cash on the sidelines.

In summary,  I expect both the economy and the financial markets to be stable to positive through the end of the year.  However, I am anticipating a bit more volatility in stocks during October.  I continue to monitor your portfolio and will let you know if any adjustments are warranted.

Feel free to call me if you have any questions.

Also, please share this report with anyone who you feel would benefit from the information.

October Calendar of Events   (comments and additions for future months are always welcome)

  • October is Breast Cancer Awareness and Domestic Violence Awareness month.

 

October 7th        1 year anniversary of purchasing our office building – we’d love to have you come for a visit   – 141 W Main Street Rockaway

October 9th       Columbus Day

October 15th  Medicare open enrollment    thru 12/7/17 – you can switch from original Medicare to Medicare Advantage, or vice versa. You can also switch from one Medicare Advantage plan to another, or from one Medicare Part D (prescription drug) plan to another, or drop your Medicare Part D coverage altogether. Please call us if you have any questions about your options.

October 22nd   National Nut Day – only in America can you have a day to celebrate nuts.  Ps: peanuts are legumes, not nuts!

October 31st    Halloween

 

Weekly Market Notes – October 2, 2017

Weekly_Market_Notes

For the Week of October 2, 2017

The Markets

Technology gains helped the S&P 500 and the NASDAQ advance to record levels Friday. The three major indexes completed the quarter with solid gains; the S&P closed its sixth month of gains. For the week, the Dow rose 0.25 percent to close at 22,405.09. The S&P gained 0.72 percent to finish at 2,519.36, and the NASDAQ climbed 1.07 percent to end the week at 6,495.96.

Returns Through 9/29/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.25 15.45 25.45 12.35 13.57
NASDAQ Composite (PR) 1.07 20.67 22.29 13.07 15.83
S&P 500 (TR) 0.72 14.24 18.61 10.81 14.22
Barclays US Agg Bond (TR) -0.10 3.14 0.07 2.71 2.06
MSCI EAFE (TR) -0.02 19.96 19.10 5.04 8.38

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

More Than Just Wages — For every $1 spent for wages and salaries in the private sector, employers spend an additional 44 cents on benefits. Average compensation is $23.15 per hour while the cost of benefits averages an additional $10.11 per hour (source: Bureau of Labor Statistics, BTN Research).

In or Out? — Health insurance companies had until Sept. 27 to decide whether they will participate in the federal health insurance exchange in 2018. Open enrollment for 2018 insurance coverage begins on Nov. 1 (source: BTN Research).

Smaller — The Federal Reserve remitted $92 billion to the Treasury in 2016, the interest return on its $4.2 trillion bond portfolio. These payments would decline as the Fed shrinks its balance sheet (source: BTN Research).

 

WEEKLY FOCUS – Designated an Executor? What You Should Ask

Having a loved one ask you to serve as their executor is a tremendous honor, knowing they trust you to carry out their final wishes. It is also a huge responsibility, particularly with considerable estates. And you’ll likely be carrying out your duties at a very difficult time emotionally. Asking your family member to do the following can make performing your role much easier when the time comes:

Share their choice with other family members. If, for example, a parent has asked you to be their executor, they should tell your other siblings why. Perhaps you are the oldest, you live the closest, you can spare the time off work or you have a business/financial background.

Create a letter of direction. Even if your family member prefers to keep their will or final wishes private for now, they should prepare a letter of direction that includes:

  1. Where the will is located, ideally in a safety deposit box or filed with their lawyer.
  2. Where they keep any deeds, partnership documents, insurance policies, etc.
  3. A list of personal possessions assigned to desired recipients.
  4. Contact information for their attorney, accountant, financial advisor, banker and any other important professionals they work with.
  5. Advanced health directives. Having a loved one’s wishes in writing when they can no longer make their own decisions can prevent potential conflict among relatives.
  6. Service and remains preferences. Do they want to be cremated or buried? Where would they like their funeral or memorial service?

Keep and update a yearly accounting sheet. A current snapshot of assets can greatly reduce the amount of detective work you’ll need to do.

Create a digital estate plan. In today’s digital world, you’ll need a list of online financial and social media accounts with passwords.


Keep some ready cash. Providing access to a cash account will make it easier to pay bills and final expenses before everything is settled.

Estate planning can be very involved, and it’s crucial to get it right. We’d be happy to work with your loved one and their other advisors to find solutions for their situation. Securities America and its representatives do not provide legal advice.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright October 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 1911159.1

Weekly Market Notes – September 25, 2017

Weekly_Market_NotesFor the Week of September 25, 2017

The Markets

Stocks wavered Friday amid continued threats from North Korea and concerns over the latest proposed healthcare bill. At closing, The S&P and the NASDAQ posted marginal gains while the Dow fell. For the week, the Dow rose 0.36 percent to close at 22,349.59. The S&P gained 0.09 percent to finish at 2,502.22, and the NASDAQ fell 0.33 percent to end the week at 6,426.92.

Returns Through 9/22/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.36 15.17 24.57 11.97 13.28
NASDAQ Composite (PR) -0.33 19.39 20.37 12.39 15.11
S&P 500 (TR) 0.09 13.43 17.33 10.16 13.76
Barclays US Agg Bond (TR) -0.15 3.24 0.31 2.79 2.16
MSCI EAFE (TR) 0.70 19.99 17.54 4.30 7.80

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

U.S. Petroleum Exports — Total petroleum exports from the United States have quadrupled over the last decade, rising from 1.3 million barrels per day in 2006 to 5.2 million barrels per day in 2016 (source: Department of Energy, BTN Research).

Quantitative Easing — In 2008, Federal Reserve Chairman Ben Bernanke announced Quantitative Easing, his revolutionary idea designed to keep the U.S. economy from falling into a 1920s-style depression. The plan involved the creation of bank reserves used to purchase bonds from American banks (source: Federal Reserve, BTN Research).

Six Years, Three Rounds — Overall, Quantitative Easing (QE) ran for six years over three programs. QE No. 1 began on Nov. 26, 2008, and QE No. 3 ended on Oct. 29, 2014 (source: BTN Research).

 

WEEKLY FOCUS – Four Things You Need to Know About Life Insurance

We don’t think twice about insuring our home or car against damage or loss. But 30 percent of U.S. households aren’t insured against the loss of a loved one. Why would anyone second guess the need for life insurance? It plays an integral role in most complete financial plans.

Here are some facts about life insurance you should know.

If anyone relies on you financially, you probably need life insurance. If you’re married or have children, it’s almost obligatory. But what if you’re a life partner; have an employee or business partner; or have a dependent parent, sibling or relative? Your unexpected demise will also impact their financial lives.

Life insurance doesn’t just put a monetary value on your life.  It helps compensate for the financial consequences of a sudden loss of life. Adequate life insurance can eliminate the need to tap into savings or retirement funds to help pay for final expenses, outstanding loans and mortgages, educational expenses or lost income. It can help maintain a standard of living.

Life insurance is a risk management tool, not an investment. Some policies do offer an investment feature with a degree of tax privilege, but that doesn’t make them good investments. Instead, consider filling up your emergency cash reserve, paying off nonmortgage debt, maxing out your 401(k) or Roth IRA, contributing to a 529 education savings plan or setting aside money for large purchases you might expect in coming years. On the other hand, don’t assume you’re better off investing rather than buying life insurance. Until you’ve reached the breakeven point of asset accumulation, you probably need life insurance.

The death benefit may be taxed. Death benefits usually don’t incur taxes. However, there is an exception. If the insured, the beneficiary and the policy owner (whoever pays the premium) are three different people, the benefits may fall under the gift tax.

Call our office today. We can help determine how life insurance can help you secure your financial plans.

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*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright September 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#1905168.1

Weekly Market Notes – September 18, 2017

Weekly_Market_Notes

For the Week of September 18, 2017

The Markets

Wall Street achieved record highs on Friday as the S&P 500 crossed the 2,500 point threshold as telecommunications shares rose and technology stocks recovered after two days of declines. For the week, the Dow rose 2.19 percent to close at 22,268.31. The S&P gained 1.63 percent to finish at 2,500.23, and the NASDAQ rose 1.39 percent to end the week at 6,448.47.

Returns Through 9/15/17 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.19 14.75 25.34 12.15 13.18
NASDAQ Composite (PR) 1.39 19.79 22.84 12.58 15.16
S&P 500 (TR) 1.63 13.33 18.86 10.32 13.66
Barclays US Agg Bond (TR) -0.50 3.40 0.90 2.91 2.28
MSCI EAFE (TR) 0.56 19.15 20.37 3.91 7.46

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

 

10 Positive Months — The S&P 500 gained 0.3 percent (total return) in August 2017, its 10th consecutive positive month. The last time the S&P 500 had a streak this long was the 10 consecutive months that ended in September 1995 (source: BTN Research).

Missing Out — Every income group reporting up to $200,000 of household income has a participation percentage in the stock market of 40% or less. For example, only 40% of American households reporting between $100,000-$199,999 of income invest in the stock market, while the percentage falls to just 20% for households reporting $50,000-$74,999 of income (source: Federal Reserve Bank of St. Louis).

October, Best and Worst — The three best gain days (by percentage) for the S&P 500 in the last 67+ years (i.e., dating back to Jan. 1950) all occurred during October. Five of the seven largest loss days (by percentage) for the S&P 500 over the same time period occurred during the month of October (source: BTN Research).

 

WEEKLY FOCUS – Things You Can Do With a 401(k) but Not an IRA

Each type of retirement account has its own advantages and disadvantages. Today, we’ll look at some things you can do with a 401(k) you can’t do with an IRA, such as:

Lower tax bills, regardless of income or age. While there are income and age limits to contribute to traditional IRAs and income limits to contribute to individual Roth IRAs, if you are still employed, you can contribute the maximum amount allowed to your employer’s 401(k) irrespective of your income level or your age. For 2017, this means you can contribute $18,000 if you’re under 50 or $24,000 if you are 50 or older.

Postpone RMDs. With no exceptions, required minimum distributions must begin from a traditional IRA when you reach age 70½. But as long as you are still working for the company that sponsors your 401(k), are considered an employee (even if you’re working nominal hours) and don’t own more than 5 percent of the company, you will not be required to take RMDs from your 401(k).

Take earlier penalty-free withdrawals. Although there is typically a penalty for IRA or 401(k) withdrawals before age 59½, you may take a penalty-free withdrawal from a 401(k) if you are 55 or older and retire or leave your employer.

Contribute to a Roth, regardless of income. You can contribute to an individual Roth IRA only if your modified adjusted gross income falls below the legal limit. However, more employers are offering Roth 401(k) options. Like a traditional 401(k), there are no income limits for salary deferrals.

Take a loan. While it should be a last resort, you may be able to borrow from your 401(k) if your plan includes a loan provision. If it does, you will likely be required to pay it back in fairly equal payments, including interest, within five years.  

Just as there are benefits and drawbacks for different types of retirement accounts, there are pros and cons for consolidating accounts. Having too many retirement accounts may make it harder to manage your asset allocation and cost more in fees, but maintaining a few different types can increase flexibility before retirement and tax options in retirement. Our office would be happy to help you decide what type of account seems best for your situation or weigh consolidating your existing accounts.

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* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright September 2017. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#1898963.1