Weekly Market Notes – April 15, 2019

Weekly_Market_Notes

For the Week of April 15, 2019

The Markets

Stocks rose Friday following a batch of encouraging corporate news, including strong bank earnings. At closing, all three benchmarks were within 2 percent of their all-time highs.  For the week, the Dow fell 0.03 percent to finish at 26,412.30. The S&P gained 0.56 percent to finish at 2,907.41, and the NASDAQ climbed 0.57 percent to end the week at 7,984.16.

Returns Through 4/12/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.03 13.96 10.40 17.01 13.22
NASDAQ Composite (PR) 0.57 20.33 11.82 17.90 14.83
S&P 500 (TR) 0.56 16.67 11.34 14.44 12.16
Barclays US Agg Bond (TR) -0.12 2.52 4.30 1.83 2.50
MSCI EAFE (TR) 0.28 12.49 -3.16 8.36 2.98

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.

 

Yield Curve — Some economists view an inverted yield curve as a sign of future economic weakness. The last seven recessions in the U.S. (since 1965) have been preceded by an inverted yield curve, i.e., the three-month Treasury bill yield exceeding the 10-year Treasury note yield. There were also two inversions that were not followed by a recession within a 12-month period (source: Federal Reserve Bank of Cleveland, BTN Research).

Down Then Up — The S&P 500’s fourth quarter 2018 loss of 13.5 percent (total return) was followed by a first quarter 2019 gain of 13.6 percent, just the sixth time in the last 50 years that a double-digit-loss quarter has been followed by a double-digit-gain quarter (source: BTN Research).

Large Impact — The 13 largest stocks in the S&P 500 made up 25 percent of the total stock market capitalization of the index as of close of trading on Friday, April 5. Three percent of the stocks in the index represent 25 percent of the total value of the index (source: S&P, BTN Research).

 

WEEKLY FOCUS – Don’t Shred Those Tax Documents Yet

You’ve completed your taxes for the year and now you’re wondering what to do with that pile of records, 1099s, receipts and bank statements. The experts agree, take the time to organize them and store them in a secure place. You may need to refer to them in the months or even years ahead if there’s an error on your return or if you need to file an amendment or are audited.

When organizing all that paper, it’s first important to know what records you should keep. The IRS recommends holding on to any documents related to the income you’re reporting or any deduction or credit you’re claiming, including:

  • Proof of income, including W-2s and 1099s, bank and brokerage statements, K-1 forms and spousal-support payment records
  • Bills and invoices, credit card statements, mileage logs, cancelled checks
  • Financial records related to real property, including paperwork from the purchase or sale of a home and all documents associated with the costs of buying, selling or managing rental properties
  • Investment records related to stock transactions, IRAs and other retirement accounts

If you’re not sure whether to keep a document or not, err on the side of caution and store it in your files.  How long you should hang on to all those documents varies, depending on the action, expense or event which the document records. The IRS has the right to review all tax returns filed during the Period of Limitations, the time in which you can amend your tax return to claim a credit or refund or the IRS can assess additional tax. That period is typically three years from the date you filed for any given year.  So, in general, a return and the related documents can be shredded three years after the date it was filed.

If you believe you may have under-reported your annual income by 25 percent or more, you should keep your return and related documentation for six or seven years. You should create digital copies of all your documents. That way, if the printed version is lost or destroyed, you will have a backup.

We are happy to work with you and your tax professional to help keep your financial records up-to-date and create a personal financial plan tailored to your habits and lifestyle. Call us today.  Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

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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 April 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2502817.1

Weekly Market Notes – April 8, 2019

Weekly_Market_Notes

For the Week of April 8, 2019

The Markets

Wall Street stocks rose on Friday amid a strong jobs report and renewed hopes of an end to the U.S. – China trade dispute. According to the Labor Department, 196,000 nonfarm jobs were added in March. On Thursday, President Trump indicated Beijing and Washington were close to a trade deal. For the week, the Dow rose 2.79 percent to finish at 26,424.99. The S&P gained 2.78 percent to finish at 2,892.74, and the NASDAQ climbed 3.51 percent to end the week at 7,938.69.

Returns Through 4/05/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.79 14.00 10.36 17.31 12.70
NASDAQ Composite (PR) 3.51 19.64 12.18 17.91 13.98
S&P 500 (TR) 2.78 16.02 10.83 14.57 11.45
Barclays US Agg Bond (TR) -0.39 2.64 4.53 1.83 2.66
MSCI EAFE (TR) 2.56 12.17 -2.24 9.23 2.55

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.

 

Increased Buying Power — The average interest rate nationwide on a 30-year fixed rate mortgage was 4.06 percent last week, its lowest level of 2019. As recently as Nov. 15, 2018, the 30-year fixed rate mortgage had an average interest rate of 4.94 percent (source: Freddie Mac, BTN Research).

Future Plans — Forty-eight percent of households in America headed by individuals at least age 55 have no retirement savings; 26 percent have a defined contribution (DC) plan (e.g., 401(k) or IRA) but no defined benefit (DB) pension plan, and the remaining 26 percent have both a DC and a DB plan (source: Government Accountability Office, BTN Research).

A Gain This Year — As of the close of business on Friday, March 29, 2019, 88 percent of the stocks in the S&P 500 were trading at a price that was higher than where they ended in 2018 (source: BTN Research).

 

WEEKLY FOCUS – Preserving a Legacy Through Education

Over the next several decades, roughly $30 trillion in assets will pass from the baby boomers to their Gen X and Y offspring. In all too many cases, younger generations are not adequately prepared to acquire this wealth. Seventy percent of wealthy families lose their wealth by the second generation, and 90 percent lose it by the third, according to the Williams Group wealth consultancy.

Although parents teach their children to buckle their seatbelts and be cautious on the internet, they’re not doing as well teaching them about the dangers of excessive debt and the blessings of compound interest. And only a third of states require a personal finance course in high school. As a result, Standard and Poor’s Global Financial Literacy Survey ranks the U.S. 14th for financial literacy, with just 57 percent of adults meeting the standard.1

There are countless ways parents and grandparents can prepare children and young people for financial well-being, including:

  • Teaching them to earn their own money by paying a commission for chores – rather than an unearned allowance.
  • Showing opportunity costs with either/or choices. “If you buy this video game, you won’t be able to buy the shoes you want.”
  • Teaching them to avoid impulse buying by waiting at least a day before buying anything over $15.
  • Explaining the benefits of time and compounding. For instance, assuming a 6 percent annual return, a 20-year-old only needs to invest $319 a month to accumulate a $1,000,000 retirement fund at age 67. But if the same person waits until they turn 30, they’ll need to save $613 a month.2
  • Helping them set savings goals, create a budget and track their spending.
  • Personally demonstrating what financial discipline and contentment look like.
  • Having ongoing discussions on topics like wants versus needs, the value of long-term investing, market volatility, giving, and career choices and preparation.

This Friday is Teach Children to Save Day, a good time to find ways to share the important financial lessons you’ve learned with younger generations. For help educating your loved ones, contact our office. 1  https://www.investmentnews.com/article/20190302/FEATURE/190229936/financial-literacy-an-epic-fail-in-america

2 https://www.cnbc.com/2018/09/28/how-much-you-have-to-save-every-month-to-retire-with-1-million.html

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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 April 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2493648.1

April 2019 Monthly Outlook – Wish Upon A Star

The first quarter of 2019 is in the books and fortunately for investors, a return to “normalcy” has occurred. Now “normalcy”, as used here, refers to the penchant for stocks to march deliberately higher and bond yields to stay stubbornly low. Last quarters brutal sell-off in equities is but a distant memory and Pollyanna has returned.

While I’m thrilled with the rebound in asset prices I’m not sure the markets aren’t wishing upon a star at this stage in the economic cycle.

On March 28, 2019 the final reading for 4th quarter 2018 US Gross Domestic Product was up 2.2%, with the growth for all of 2018 at 2.9%. Consumer and government spending were revised down in the report.  On March 26th, the Consumer Confidence Index declined from 131.4 in February to 124.1 in March.  The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – decreased from 103.8 in February to 99.8 in March. Just today, the Institute for Supply Management non-manufacturing index declined in March, to the lowest level since August 2017.  Clearly, the US economy is slowing. However, I believe we maintain growth at roughly 2% per year.

The global economy is also showing signs of slowing.  Much of this is, I believe, attributable to 2 big geo-political unknowns – the US/China trade negotiations and the United Kingdom leaving (or not) the European Union. These types of unknowns bring business investment in hiring, new equipment, and new product development to a halt. Getting these two issues resolved, hopefully in a positive fashion, will provide a boost to global growth. Alternatively, a breakdown in the US/China trade deal and/or a negative outcome in the UK would likely increase the odds of a global economic slowdown.

4.4.2019_MONTHLY_OUTLOOK_CHART_1

On the investment front,  I am most concerned about corporate earnings, which start reporting on April 14th.  Corporate earnings growth slowed dramatically in the 4th quarter of 2018, and could even turn negative for the 1st quarter of 2019.  While the stock market is aware of this, I’m not sure it has priced it correctly.  If 1st quarter earnings are better than expected then the market probably continues its upward bias.  If earnings are worse, then I expect the market to experience a selloff, albeit not as dramatic as what we saw at the end of last year.

4.4.2019_MONTHLY_OUTLOOK_CHART_2

Overall, I remain optimistic but cautious.  We have some tailwinds – low interest rates and inflation, a steady job market and slowly rising wages, but there are risks that are hard to quantify – political uncertainty and trade tensions.  We will continue to monitor the situation and adjust accordingly.

I hope you find this report helpful. Please feel free to share it.

We have added a new tool to help those nearing or just beginning retirement to explore their readiness for retirement.  It’s an easy interactive tool.  Please share it with family, friends and colleagues.

https://www.ready-2-retire.me/JimMcCarthy

 

 

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

  • April  is National Autism Awareness month.  Let’s all get educated on this issue and works towards acceptance and inclusion of people dealing with autism.
  • April is also National Financial Capability month.  We at Directional Wealth Management commit to equipping individuals to lead better financial lives through an integrated framework of educational resources, collaborative tools,  and personal one-to-one advice.

 

April 10th                     Christian’s wife Maecy birthday

April 12 & 13th            We adopted our 4 legged children Coco (2010) and Buddy (2013)

April 15th                     Tax Day.  Remember to make those IRA or Roth contributions.

April 20th                     Passover begins – Chag Pesach Sameach

April 21st                     Easter Sunday – Have a blessed and Holy Easter

April 22nd                     Earth Day – let’s all recycle, turn out lights when we leave rooms, and do all we can for our environment

April 24th                     Administrative Professionals day – remember your staff

April 25th                     My daughter Satya’s birthday – wow she is turning 35!  I must be getting old 😊

 

 

Sources:  JPMorgan, Nottingham Advisors

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

March 25, 2019 Market Update

Friday 3/22/19 saw the largest single day decline in the S&P 500 since January 3, 2019. The catalysts were weaker than expected manufacturing index reports for the US and Europe, and the inversion of the yield curve.

The yield curve inverts when shorter-term interest rates are higher than longer-term interest rates.  Historically, an inverted yield curve is a fairly reliable predictor of an upcoming recession.  However, while every recession since 1962 has been preceded by an inverted yield curve, not every inversion of the yield curve has led to a recession.

Some analysts like to use the 2-year Treasury versus the 10-year Treasury.  My research tells me the more reliable indicator comes from comparing the 3-month Treasury bill to the 10 year Treasury bond.  Recessions have historically started within 18-24 months of an inversion of the 3-month/10-year rates.  On Friday, the 3-month/10-year rates inverted briefly.  It finished the day with the 10-year rate higher by only 0.02%, the smallest spread between these rates since September 2007.

These factors combined to heighten concerns of a slowing global economy.  Two other big unknowns hanging over the markets right now are the US/China trade deal and the United Kingdom leaving the European Union.  A negative outcome for either or both will likely put further pressure on global growth.  A positive outcome for either or both will likely relieve some of the concern.

The next couple of weeks should provide some clarity as the UK has a vote on Brexit this coming week and the Trump administration is pushing to conclude their trade negotiations with China. I expect volatility to be elevated as the market awaits the outcome of these issues.

As always, we continue to monitor the situation closely and will respond accordingly.

Weekly Market Notes – March 25, 2019

Weekly_Market_Notes

For the Week of March 25, 2019

The Markets

Stocks tumbled Friday. The three major indexes had their worst day in 2½ months. Contributing factors included weak factory data from the U.S., Europe and Japan, and a negative spread between the three-month Treasury bill yield and the 10-year note. For the week, the Dow lost 1.34 percent to finish at 25,502.32. The S&P dropped 0.75 percent to finish at 2,800.71, and the NASDAQ fell 0.60 percent to end the week at 7,642.67.

Returns Through 3/22/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -1.34 9.97 8.93 15.96 12.05
NASDAQ Composite (PR) -0.60 15.18 6.64 16.60 12.31
S&P 500 (TR) -0.75 12.26 8.07 13.24 10.71
Barclays US Agg Bond (TR) 0.87 2.61 4.68 2.19 2.72
MSCI EAFE (TR) -0.34 10.09 -3.88 7.33 2.90

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.

 

 

 Worth It — The average college graduate with a bachelor’s degree will earn $2.8 million over their lifetime. The average high school graduate with no additional higher education will earn $1.5 million over their lifetime (source: Center on Education and the Workforce, BTN Research).

Making Things — The 12.8 million manufacturing jobs in the U.S. as of February 2019 is the nation’s largest total since December 2008 (source: Department of Labor, BTN Research).

Wage Gains — The year-over-year increase in the average hourly earnings of all private sector workers was 3.4 percent in February 2019, i.e., wages of $27.66 per hour in February 2019 vs. wages of $26.75 per hour in February 2018. That’s the largest year-over-year percentage increase reported in the private sector since April 2009 (source: Department of Labor, BTN Research).

 

WEEKLY FOCUS – Pros and Cons of Consolidating Retirement Accounts

According to U.S. Bureau of Labor statistics, baby boomers average 12 jobs over their lifetimes. As a result, they often wind up with 401(k) accounts left at several former employers – plus bank and brokerage accounts. There are pros and cons of consolidating those scattered accounts.

Having assets in a lot of places complicates recordkeeping, monitoring and balancing your portfolio, updating beneficiaries and required minimum distributions (RMDs). Along with simplifying life, consolidating may reduce fees and qualify you for price breaks based on asset and trading thresholds.

If a current employer’s plan allows, you may have a choice to either roll over previous employers’ plans into its defined contribution plan or to roll older 401(k)s into a personal IRA. Defined contribution plans offer some benefits IRAs don’t. You can’t take penalty-free withdrawals from IRAs before you are 59½, but once you’re over 55, you can take penalty-free withdrawals from a 401(k) if you separate from an employer. If you work past age 70½ and don’t hold more than a 5 percent ownership in your company, you may be able to delay 401(k) RMDs.

401(k) accounts are shielded from creditors. Up to $1,283,025 in an IRA is protected from bankruptcy, but state laws vary on other types of claims. Your 401(k) plan may let you take up to a five-year loan while an IRA will allow at most a 60-day, tax-free rollover.

IRA accounts have advantages, too. A primary benefit is more freedom to choose investments. Typically, 401(k) plans include around 20 fund choices, while IRAs can encompass thousands of investment choices. Although most 401(k) plans have a good lineup of pro-growth stock funds, some smaller plans have underperforming funds and high administrative fees – particularly for former employees. And even larger plans may be weak on low-risk, fixed-income options.

When it comes to withdrawals, you can direct your IRA provider to take them out of a specific fund. But a 401(k) administrator may take an equal amount from all your investments.

When considering consolidating, it’s important to check potential fees and tax implications. Special tax rules may apply if your 401(k) includes employee stock. Give us a call if you’d like help deciding whether to consolidate previous employer plans into a current employer’s 401(k) or into a personal IRA. Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

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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 March 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2474733.1

 

Weekly Market Notes – March 18, 2019

Weekly_Market_Notes

For the Week of March 18, 2019

The Markets

Stocks rose Friday and posted strong weekly gains. The S&P achieved its best weekly advance since Nov. 30. The three major indexes have all risen more than 10 percent each in 2019. For the week, the Dow rose 1.64 percent to close at 25,848.87. The S&P gained 2.95 percent to finish at 2,822.48, and the NASDAQ climbed 3.78 percent to end the week at 7,688.53.

Returns Through 3/15/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 1.64 11.47 6.35 17.22 12.68
NASDAQ Composite (PR) 3.78 15.87 2.76 17.59 12.61
S&P 500 (TR) 2.95 13.11 4.80 14.17 11.19
Barclays US Agg Bond (TR) 0.23 1.72 3.72 2.02 2.46
MSCI EAFE (TR) 2.80 10.46 -5.00 7.85 3.00

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 Doctor Needed — Roughly 25 percent of Americans neither had claims for any health care service (i.e., they did not see a doctor or visit a clinic) nor filled a drug prescription in 2017 (source: Health Care Cost Institute, BTN Research).

Coming Soon? — Ten percent of 281 economists surveyed in February 2019 believe the United States will be in a recession by Dec. 31, 2019. Forty-two percent believe a recession will have started by Dec. 31, 2020 (source: National Association for Business Economics, BTN Research).

Bull Market Year-By-Year — The bull market for the S&P 500 reached 10 years in length as of the close of trading on Friday, March 8, having gained 400.1 percent over the period. Out of the 10 years, the two best years were the first (up 72.3 percent and the fifth (up 23.7 percent). The two worst years were the seventh (down 2.2 percent) and the 10th (up 0.4 percent). Each of the annual returns are total return results, which include the impact of reinvested dividends (source: BTN Research).

 

WEEKLY FOCUS – Ease Inflation’s Impact On Your Savings

Even if your portfolio’s value has steadily grown during this bull market, it’s important to consider the impact inflation will have on your investments between now and the day you withdraw those funds.

Inflation is a decrease in your money’s purchasing power due to rising prices. You might remember when gas was just 50 cents a gallon. Back then, a dollar went farther than today. So, it’s safe to assume your savings will have less spending power in the future. To ease the impact of inflation, consider taking steps, such as:

Invest in Stocks: Because stocks can pay dividends and their value can continue to grow, they can provide protection from inflation. A diversified portfolio that includes stocks may be subject to more volatility but can have more purchasing power down the road.

Consider Bonds and Real Estate: The fixed income provided by bonds can add stability to your portfolio. To limit exposure to inflation, focus on short-term bonds that can be sold and reinvested in just a few years. You may also consider Treasury Inflation Protected Securities and some high-yield bonds. While high-yield bonds carry more risk, they can generate income that can help offset inflation. With a few exceptions, property values have historically kept pace with inflation, making rental properties, publicly traded real estate securities and real estate investment trusts viable safeguards to your portfolio’s future value.

Evaluate Your Big-Ticket Expenses: Whether you rent or have a mortgage, you may want to consider how much you pay each month for your home and consider moving into a more affordable option. If it’s just you and your spouse living in your big family home, it may be time to downsize. If you’re making large car payments or in the market for a new car, consider buying a reliable used car. The money you save could be reinvested and used to help offset inflation in the years ahead.

The effects of inflation can hit you particularly hard in retirement. As the cost of day-to-day necessities goes up, your disposable income declines, leaving just two options: curb spending or borrow money. You’ve worked hard to build a portfolio to make your retirement years enjoyable. While you can’t slow inflation, you can ease its impact to help you get the most from your money. To learn more ways to protect your retirement savings from inflation, call us today.

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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 March 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2465585.1

Weekly Market Notes – March 11, 2019

Weekly_Market_Notes

For the Week of March 11, 2019

The Markets

A weak U.S. jobs report and a sharp drop in Chinese exports pushed Wall Street lower Friday. The three major indexes dropped for the fifth session in a row. It was the Dow’s longest slide since June 21, the S&P’s longest skid since Nov. 14 and the NASDAQ’s longest losing streak since April 25. For the week, the Dow fell 2.17 percent to finish at 25,450.24. The S&P lost 2.12 percent to finish at 2,743.07, and the NASDAQ dropped 2.46 percent to end the week at 7,408.14.

Returns Through 3/08/19 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -2.17 9.67 4.56 17.28 11.80
NASDAQ Composite (PR) -2.46 11.65 -0.27 16.82 11.31
S&P 500 (TR) -2.12 9.87 2.16 13.79 10.12
Barclays US Agg Bond (TR) 0.68 1.49 3.69 1.87 2.53
MSCI EAFE (TR) -1.94 7.45 -7.04 7.35 1.79

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.

 

Past Performance Is No Guarantee — Only 16 percent of 1,013 adults surveyed believe stock market performance during the decades before they were born is a very or extremely important factor to consider when making financial decisions (source: J. Choi and A. Robertson’s study “What Matters to Individual Investors?”, BTN Research).

Worst to First — The worst performing stock in the S&P 500 in 2018 lost 67.1 percent last year. That same stock is ranked No. 1 among all stocks in the index this year through Feb. 28, up 67.7 percent YTD (source: BTN Research).

No Work — Thirty-seven percent of retired Americans report they retired earlier than planned because of health problems, buyout packages, layoffs, grandchildren or caring for an aging parent (source: Health and Retirement Study, BTN Research).

 

WEEKLY FOCUS – Joint Planning for Medicare and Social Security

Medicare and Social Security planning can be complicated, particularly for couples. It’s important to look at the short- and long-term impact of decisions on both individuals. Here are a few typical planning examples to consider.

Medicare: When a couple of mixed ages are both enrolled in the primary provider’s healthcare plan at work, the younger spouse will need to find their own insurance if the provider spouse switches to Medicare at age 65. To prevent this, the provider spouse may delay Medicare enrollment to keep the uninsured spouse on their company plan while they remain employed. They will not pay a penalty if their company has at least 20 employees.

While on the employer plan, the provider spouse may sign up for Medicare Part A (free hospital insurance). If their company has less than 20 employees, Part A could become the primary payer for hospital stays. One potential drawback is an individual enrolling in Part A can no longer contribute to an HSA.

In most cases, an individual should wait to sign up for Part B (medical insurance) until they are ready to purchase a supplement. An individual who enrolls in Part B but doesn’t purchase a supplement may be subject to underwriting when they try to purchase a supplement later, which means they could be turned down or pay more because of health conditions.

Social Security: Couples with comparable earnings often weigh whether they can afford to wait to draw Social Security, how much their benefits will grow by delaying them and how long they expect to live. Typically, an individual must live into their late 80s before the increased benefits from deferral offset benefits they lost by not drawing from age 62 to 70.1 Among couples with disparate earnings, the lower earning spouse may draw whichever is greater – their own benefits or half their spouse’s benefits (once their spouse begins drawing).

So a higher earning spouse may increase the amount their partner receives by delaying drawing their own Social Security. If the primary earner dies first, this will also leave their spouse with a greater monthly survivor benefit during his or her remaining years.

When to claim Social Security and Medicare are major decisions that will have a lasting impact on you and your spouse. We can help you look at your individual circumstances and evaluate your options to make an informed decision. 1https://www.fidelity.com/viewpoints/retirement/social-security-tips-for-couples

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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 March 2019. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2456347.1