For 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.

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.

*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

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.

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.

* 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

For the Week of September 11, 2017

The Markets

Amid concerns over North Korea’s actions, impending Hurricane Irma and news of the data breach at Equifax, the S&P 500 and the NASDAQ closed lower, while the Dow edged up. After two weeks of gains, all three major indexes were down for the week. For the week, the Dow fell 0.82 percent to close at 21,797.79 The S&P lost 0.58 percent to finish at 2,461.43, and the NASDAQ dropped 1.17 percent to end the week at 6,360.19.

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.

Cut in Half — The percentage of delinquent home mortgage loans (defined as being at least one monthly payment late but not including loans in the foreclosure process) was 8.44 percent at the end of the second quarter 2011. That number had fallen to 4.24 percent as of the end of the second quarter 2017 (source: MBA, BTN Research).
Chasing Last Year’s Winners — An equal dollar investment made at the end of the day on Dec. 31, 2016, in the 10 best performing individual stocks within the S&P 500 from calendar year 2016 was up 8.4 percent YTD through Aug. 31, 2017 (source: BTN Research).
Betting on Last Year’s Worst — An equal dollar investment made at the end of the day on Dec. 31, 2016, in the 10 worst performing individual stocks within the S&P 500 from calendar year 2016 was up 16 percent YTD through Aug. 31, 2017 (source: BTN Research).

WEEKLY FOCUS – Equifax Security Breach

Equifax announced last Thursday a cyber breach of its systems potentially affecting about 143 million people. The attack, second in size only to those last year at Yahoo, affects twice as many people as the J.P. Morgan Chase attack nearly three years ago.

The three nationwide credit reporting companies – TransUnion, Experian and Equifax – receive data about you from a wide range of sources, including credit card companies, retailers, lenders and banks. In the Equifax breach, cybercriminals mined the four crucial pieces of consumer information needed to apply for loans and credit cards: names, Social Security numbers, addresses and birth dates. Banks will now have to reissue cards for the 209,000 people whose credit card numbers were also exposed.

Although Equifax hasn’t found any evidence of unauthorized activity, the company is offering one year of free credit file monitoring and identify theft protection through TrustedID Premier, even if you haven’t been affected. Equifax won’t contact everyone who was affected. To see if your information is at risk, go to https://www.equifaxsecurity2017.com/, click on the Potential Impact button at the bottom of the page, and enter your last name and last six digits of your Social Security number. Click submit, and you’ll receive a message stating whether your information is at risk and how to sign up for the free service.

Monitoring won’t begin until Sept. 11 at the earliest, so you won’t know right away if your information was in fact compromised. By receiving the free service, you agree to submit any complaints to arbitration; you won’t be able to sue, join a class-action suit or benefit from a class-action settlement. You can opt out by notifying Equifax in writing within 30 days of accepting the service.

As a precaution, you may want to place fraud alerts on your credit reports, so lenders must verify your identity before issuing credit in your name. You can also contact one of the three credit agencies and put a long-term freeze on your credit. The credit agency is then required to notify the other two. A freeze can last for 90 days and is renewable.

Call our office today for more ways to secure your online information – and your financial future.

* 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#1892834.1

For the Week of September 5, 2017

The Markets

Stocks edged up Friday following a lukewarm jobs report, which reduced the likelihood of another rate hike this year. In other economic data, factory activity soared in August while construction spending fell in July. For the week, the Dow rose 0.88 percent to close at 21,987.56. The S&P gained 1.43 percent to finish at 2,476.55, and the NASDAQ climbed 2.71 percent to end the week at 6,435.33.

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.

In the Year 2047 — The current U.S. national debt of $19.8 trillion today is projected to reach $25.2 trillion at the end of fiscal year 2027 and $92 trillion by the end of fiscal year 2047. The $92 trillion estimate will be approximately 150 percent of the U.S. economy in 2047 (source: Congressional Budget Office, BTN Research).

Working Hard — Productivity of the average American worker (output per worker per hour) over 10-year stretches increased 34 percent from 1957-1966. Productivity experienced its weakest 10-year growth of 11 percent from 1973-1982. Productivity grew just 13 percent from 2007-2016 (source: Department of Labor, BTN Research).

Great for Buyers — The national average interest rate on a 30-year fixed rate mortgage fell to 3.86 percent last week, the lowest average recorded during calendar year 2017 (source: Freddie Mac, BTN Research).

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

While both 401(k)s and IRAs share some similarities as tax-deferred retirement savings vehicles, IRA accounts allow you to do some things you can’t with a 401(k), such as:

Combine your RMDs. If you have multiple 401(k) accounts when you are 70½ or older, you’ll need to take your required minimum distribution from each 401(k). But if you have multiple IRAs, you can combine the RMDs and take them from any single IRA account.

Opt out of withholding. Distributions from 401(k)s are typically subject to a mandatory 20 percent withholding. If you know your tax bill will be low or negligible, you can forego withholding on an IRA distribution, eliminating the wait to get the funds back when you file your taxes.

Take an early distribution. While it’s best to avoid using retirement savings for other purposes, when the unexpected occurs, being able to access them can be a real gift – even if you must pay income tax and a penalty for an early withdrawal. This option is guaranteed under the law with IRAs; whether you have this same ability with your 401(k) depends on your plan’s rules.

Use funds for higher education expenses. Although early withdrawals from pre-tax retirement accounts generally incur a penalty, there are legal exceptions for IRAs, including using funds for higher education expenses for yourself or your children.

Make a qualified charitable distribution (QCD). If you are 70½ or older, you may choose to send up to $100,000 directly from your IRA account to a charity. Because the QCD is not counted as income, it may lower your tax bill more than if you take a distribution and make a separate donation. Plus, the QCD can offset part or all of your RMD.

Enjoy greater investment choices. Most 401(k) plan sponsors limit investors to 20-30 mutual funds, some of which may be accompanied by high fees and lackluster performance. In contrast, except for prohibited investments, such as life insurance or collectibles, choices are nearly limitless in an IRA.

Need help deciding whether to roll a 401(k) into an IRA or to consolidate retirement accounts? Give us a call to discuss the pros and cons.  Securities America and its representatives do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

*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#  1888074.1