For the Week of June 25, 2018

The Markets

A sharp rally in crude-oil prices boosted energy stocks Friday, which led the S&P higher and helped the Dow Jones end an eight-day losing streak. Technology stocks kept the NASDAQ in negative territory. For the week, the Dow lost 2.03 percent to close at 24,580.89. The S&P fell 0.87 percent to finish at 2,754.88, and the NASDAQ dropped 0.69 percent to end the week at 7,692.82.

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.

End of This Month — The second longest economic expansion in U.S. history (based upon data tracked since 1854) will reach nine years in length as of June 30, 2018 (source: National Bureau of Economic Research, BTN Research).

Bonds — The U.S. bond market (including treasury, municipal, corporate, mortgage and asset-backed debt) was worth $41.7 trillion as of March 31. Treasury debt ($14.9 trillion) makes up the largest piece of the U.S. bond market (source: Securities Industry and Financial Markets Association, BTN Research).

In Nearly a Century — Oil production in the United States reached 10.9 million barrels per day for the week ending June 8, 2018, the highest level recorded for our country per records maintained since 1920 (source: U.S. Energy Information Administration; BTN Research).

WEEKLY FOCUS – Trusts Can Provide Solutions to Planning Quandaries

Trusts are often associated with end-of-life planning to ensure assets are managed and held for another person’s benefit. They’re used to ensure assets are distributed exactly the way you want. They can help avoid the headache and expense of probate court, provide protection from lawsuits and creditors, and solve other financial challenges. But trusts can be useful in other types of financial situations as well.

There are basically two types of trusts. Revocable trusts can be modified, and the grantor remains in control. Once an irrevocable trust is established, it can’t be modified, and the grantor gives up control. It’s important to be familiar with the pros and cons of each. The following are some situations that might call for a trust.

Special Needs Beneficiaries: A trust can provide protection and income for a loved one who is unable to take care of themselves. An advantage to a revocable trust is the beneficiary can still take advantage of qualified government benefits or assistance, no matter how large the trust. It can also financially support an alternate caregiver if the primary caregiver becomes incapacitated.

Protecting Assets From Theft: Identity theft is a constant and growing problem as cyber criminals go online to gather personal information that can be used to steal funds and hijack identities. Irrevocable trusts usually have their own tax ID numbers. Beneficiaries who become victims of theft may be able to draw funds from the trust while they sort out their financial difficulties resulting from identity theft or fraud.

Divorce and Prenuptial Agreements: A revocable living trust may be in order if you have assets and are planning to marry, but your spouse doesn’t want to sign a prenuptial agreement. Property acquired during your marriage is generally considered common property. But what if you inherited property before you married and want to keep that outside of the communal assets? By placing it in a revocable trust, the inheritance could be exempted if the assets in the trust weren’t mixed with other marital assets. Courts usually consider assets in a revocable living trust as belonging to the grantor or trustee.

Call our office today. There are many financial situations that could benefit from the creation of a trust. We can work with you and your estate planning attorney to help develop a financial plan that addresses life’s expected, and unexpected, challenges.

* 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 June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2160511.1

For the Week of June 18, 2018

The Markets

Wall Street closed lower Friday but off the day’s lows after President Trump announced new tariffs on Chinese goods and a plummet in oil prices pushed energy stocks down. For the week, the Dow fell 0.84 percent to close at 25,090.48. The S&P rose 0.07 percent to finish at 2,779.66, and the NASDAQ climbed 1.32 percent to end the week at 7,746.38.

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.

In the Year 2034 — On June 5, Social Security trustees announced the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034. A zero trust fund does not mean the payment of Social Security benefits would also go to zero but rather would drop to 77 percent of their originally promised levels through the year 2092. When the trustees released their 2008 report (i.e., 10 years ago), the Social Security Trust Fund was projected to be depleted in 2042 (source: Social Security Trustees 2018 Report, BTN Research).

Downhill From Here — Forty-six percent of Americans surveyed believe future generations of retirees will be worse off financially than current American retirees (source: Aegon Center for Longevity and Retirement).
Strong Banks — No U.S. banks failed during the first five months of 2018 (January-May), the first time that has occurred since 2006. There were no bank failures in 2006, the last calendar year when that happened. Since 2007, 531 banks have failed, an average of 48 per year over the last 11 years (source: FDIC, BTN Research).

WEEKLY FOCUS – Things to Know Before Your Summer Getaway Abroad

Is traveling abroad on your mind? Below are some savvy tips to make sure you get the most out of your money.

Let your credit card company know you’re traveling out of the country and ask about foreign transaction fees. When it comes to cash, avoid currency exchange booths in favor of ATMs, which will give you better rates. Find a bank ATM that accepts major credit cards for cash withdrawals, and use your bank or major credit card. Larger institutions or your bank will handle exchange rates on their end, and the withdrawal will provide you with foreign currency. You’ll still be charged a transaction fee, so make fewer and larger withdrawals.

When seeking out an ATM, make sure you know what to ask for. For example, in Chile, it’s called un Redbanc; in France, ask for a distributeur; in the U.K, a cashpoint; in Italy, look for a Bankomat; and in Canada, an ABM, short for automatic banking machine. You may want to shorten your pin number – many foreign ATMs won’t accept pins longer than four digits.

Renting cars in large foreign cities may not be the best economic choice. However, it can be a good option if you visit smaller cities and villages. If you do rent a car, check the glove compartment for a cardboard parking clock. In many countries, signs post the amount of time you can park in a spot for free. Set the clock to your arrival time and return before it expires. Also, be cautious about where you park. Thieves are always on the lookout for tourist cars. A parking lot with glittering pavement could mean broken glass from break-ins. A safer option would be to use a parking garage with an attendant on staff.

Rail passes are another good choice if you’re traveling quite a bit outside bigger cities. Consider a second-class train car. They’re just as fast as first-class and cost about 50 percent less. For the most economical way to travel, look to buses. They’re slower but even less expensive than rail. For example, traveling from London to Edinburgh by train will cost around $145 but only about $45 by bus.

Call our office today. We can help ensure planning for travel and other important activities is part of your overall financial strategy.

* 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 June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2153883.1

For the Week of June 11, 2018

The Markets

All three indexes rose Friday despite tension among the seven powerful world leaders who were gathered in Canada for the G7 Summit and expectations the Federal Reserve will raise rates this week. The Dow Jones closed at its highest level since March. Both the S&P and the NASDAQ posted weekly gains for the third week in a row. For the week, the Dow rose 2.79 percent to close at 25,316.53. The S&P gained 1.66 percent to finish at 2,779.03, and the NASDAQ climbed 1.21 percent to end the week at 7,645.51.

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.

Doubled — The yield on the 10-year Treasury note closed at 2.83 percent on May 31, 2018, up 0.42 percentage points since Dec. 31, 2017, and more than double the 1.36 percent record low yield achieved on July 8, 2016 (source: Treasury Department, BTN Research).

Looking But Not Finding — In early May, seven out of eight small businesses (88 percent) in the United States reported they were having difficulties finding qualified candidates for job openings (source: National Federation of Independent Businesses, BTN Research).

Actual vs. Expected — Only 36 percent of workers surveyed anticipate their monthly Social Security benefit “will be a major source of income” during retirement. However, 67 percent of retirees surveyed have determined their monthly Social Security benefit “is a major source of income” during retirement (source: Employee Benefit Research Institute 2018 Retirement Confidence Survey; BTN Research).

WEEKLY FOCUS – Financial Planning Under the New Tax Law

With the Tax Cuts and Jobs Act (TCJA) over five months old, many families are still getting a feel for how it will impact them personally and what changes they may want to make under the new legislation. Here are a few potential issues to consider.

Charitable giving: Under the TCJA, those who itemize can now deduct 60 percent (compared to 50 percent) of their income for qualified charitable donations. So taxpayers nearing the standard deduction threshold may want to front load their charitable contributions in one year in which they itemize to get the highest tax benefits. They can do so by making several years’ donations to a donor-advised fund and then allocating the funds to their charities of choice over a period of years.

Retirement investments: Lower income tax rates may make converting a traditional IRA to a Roth look more attractive. But it’s important to weigh the decision fully since the new law eliminates the prior ability to reverse the conversion by October 15 of the following year.

Divorce: Alimony payments were previously taxed as income to the payee and deducted by the payer. Beginning in 2019, alimony will no longer be viewed as income to receiving spouses or deductible for payers who entered into divorce agreements after Dec. 31, 2018. Without the deduction, divorcing spouses will likely want to pay less in alimony going forward.

Estate planning: The threshold for estate taxes doubles from $5.6 million to $11.2 million in 2018; $22.4 million for married couples.  Only 1,800 estates nationwide are expected to owe the 40 percent levied above the exempted amount in 2018. Wealthy individuals should review existing wills with clauses tied to the tax exclusion to avoid larger dispositions than intended. It’s also good to remember the TCJA law doesn’t apply to state estate tax. Among Washington D.C. and the 12 states that levy estate taxes, only three currently match the federal exemption. And six states have an inheritance tax likely unaffected by the legislation. Unless a political shift leads to a change in law or the bequestor expects to live beyond 2026, when the law sunsets, insurance policies purchased to pay federal estate taxes may no longer be necessary.

This is just a sampling of areas the new law impacts. I encourage you to check with your tax advisor, and I am always happy to answer any questions you may have about your finances. 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 June 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2146705.1