Weekly Market Notes – September 24, 2018

Weekly_Market_Notes

For the Week of September 24, 2018

The Markets

Despite trade chatter following Monday’s announcement the White House planned to impose a 10 percent tariff on $200 billion worth of Chinese imports, the Dow Jones and S&P 500 hit record highs Friday and achieved weekly gains. For the week, the Dow rose 2.25 percent to close at 26,743.50. The S&P gained 0.86 percent to finish at 2,929.67, and the NASDAQ fell 0.29 percent to end the week at 7,986.96.

Returns Through 9/21/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 2.25 10.01 22.32 20.37 14.34
NASDAQ Composite (PR) -0.29 15.70 24.36 18.26 16.17
S&P 500 (TR) 0.86 11.13 19.44 16.58 13.69
Barclays US Agg Bond (TR) -0.26 -1.76 -1.39 1.43 2.23
MSCI EAFE (TR) 2.90 -0.55 4.07 8.43 4.43

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.

 

Declining Bond Debt — There is less outstanding municipal bond debt today ($3.8 trillion) than there was in 2010 ($4 trillion). Over the same time period, outstanding Treasury debt has increased 69 percent to $14.9 trillion (source: SIFMA, BTN Research).

Gradual Increases — Between June 2004 and June 2006, the Fed met and raised short-term interest rates by a quarter of 1 percent at 17 consecutive Fed meetings. Since Dec. 14, 2016, the Fed has met and raised short-term interest rates by a quarter of 1 percent at six of the last 14 Fed meetings (source: Federal Reserve, BTN Research).

None — As of the end of 2017, 19 percent of millennials and 12 percent of baby boomers had no money (either pre-tax or post-tax) invested in the stock market. Millennials were born between 1981-97 and were ages 20-36 in 2017, while the baby boomers were born between 1946-64 and were ages 53-71 in 2017 (source: Vanguard, BTN Research).

 

WEEKLY FOCUS – How Different Assets Affect College Financial Aid

The best time to start preparing for your child’s or grandchild’s education is before they head off to grade school. But saving early is only part of the equation. Planning to secure the best financial aid package is another. Understanding what assets are factored to calculate the Expected Family Contribution (EFC), which is subtracted from the student’s estimated costs to determine the amount of federal aid awarded, can help.

Most colleges and universities solely use the Free Application for Federal Student Aid (the FAFSA) to calculate the EFC based on students’ and their families’ assets and income for the prior-prior year. So for the 2018-2019 school year, the EFC will be determined based on 2016.

Student income and assets factor more heavily into the EFC formula than their parents’. Twenty percent of the student’s savings, investments, business interests and real estate count, while no more than 5.64 percent of their parents’ assets count. Similarly, 50 percent of student income above $6,570 counts versus 22 to 47 percent of parental income above $25,040. (The exact percentage is based on income.) Here are a few other things to keep in mind:

Financial gifts count as income. So if a student’s income exceeds $6,570, 50 percent of a grandparent’s gift will raise the student’s EFC. To avoid this, grandparents can wait until the student’s junior year to help out. Thanks to the prior-prior year accounting, their gift will no longer apply.

Because Coverdell Educational Savings Accounts and 529 College Savings Plans are considered parental assets, they are factored at the lower percentage. Since Uniform Gift to Minors Act accounts are in the child’s name, 20 percent of those assets count toward the EFC.

Retirement accounts aren’t calculated in the EFC. However, contributions and distributions made in the base year count as parental income. Similarly, cash value in life insurance policies doesn’t count, but distributions do. Home equity doesn’t apply. So families with large non-retirement account savings may consider paying their mortgage down.

Around 200 private colleges and universities award their own grants, loans and scholarships based on the College Scholarship Service (CSS) PROFILE, which differs from the FAFSA in many areas. If you have financial questions about a child’s or grandchild’s move to college, please feel free to call our office. We’re happy to help with money issues affecting multiple generations of your family.

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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 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2252891.1

Weekly Market Notes – September 17, 2018

Weekly_Market_Notes

For the Week of September 17, 2018

The Markets

Stocks were largely flat Friday. Bond yields helped financials rise. However, news that President Trump wants to impose tariffs on $200 billion of Chinese goods – despite the Treasury Secretary’s attempts to restart talks with Beijing – limited gains. For the week, the Dow rose 0.94 percent to close at 26,154.67. The S&P climbed 1.21 percent to finish at 2,904.98, and the NASDAQ gained 1.36 percent to end the week at 8,010.04.

Returns Through 9/14/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.94 7.59 20.70 19.65 13.93
NASDAQ Composite (PR) 1.36 16.03 23.94 18.41 16.56
S&P 500 (TR) 1.21 10.18 18.54 16.36 13.79
Barclays US Agg Bond (TR) -0.11 -1.51 -1.33 1.50 2.48
MSCI EAFE (TR) 1.78 -3.36 1.37 7.28 4.41

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.

 

How Did You Do? — An average single-family home in America increased in value by 6.5 percent over the one-year period from June 30, 2017, to June 30, 2018 (source: Federal Housing Finance Administration, BTN Research).

This Year and Last Year — Through Friday, Sept. 7, 2018, the S&P 500 was up 8.9 percent YTD (total return). Through Sept. 7, 2017, the S&P 500 was up 11.7 percent YTD (total return), on its way to a full-year gain of 21.8 percent (source: BTN Research).

They Already Exist — Sixty-five percent of the goods imported into the United States in 2016 were subject to a tariff imposed by the U.S.A. The average tariff on all imported goods was just 1.73 percent on a dollar-weighted basis. The largest tariffs were 33 percent levied on imported tobacco and 16 percent on imported sugar (source: Federal Reserve Bank of St. Louis, BTN Research).

 

WEEKLY FOCUS – Preparing for the Unimaginable – the Death of a Spouse

There are some things we don’t like to think about, much less prepare for. The biggest one of all is the eventual death of a spouse or partner. While it might seem unimaginable, it is inevitable. That certainty makes it a vital part of retirement income planning.

Losing a spouse can result in decreased income, which could greatly impact the surviving spouse’s lifestyle. But planning can help diminish the impact. When preparing for the possibility of losing a spouse, here are a couple things to consider.

Upon the death of a spouse, the Social Security Administration reviews benefits that were available to both spouses. The survivor receives the larger of the two benefits – not both. While a spousal death before retirement might not affect survivor benefits, if either or both of you plan to retire early, it probably will. Taking an early retirement will reduce monthly benefits by at least 25 percent. Keep in mind that waiting to retire until age 70 ensures the surviving spouse will receive the maximum amount of benefits.

If you or your spouse have pension benefits, the choice of pension distribution can help protect the surviving spouse. While a life-only distribution provides a larger monthly benefit, payments cease entirely when the pension recipient dies. But a survivorship distribution ensures at least a reduced benefit to the surviving spouse.

Losing a spouse is difficult and trying. But retirement income planning that includes options in the event of losing a spouse can help alleviate the financial stress on the survivor and protect their retirement income. Both partners should be aware of the options available.

The first step in the planning process is to set aside time to talk. Don’t let it become the elephant in the room no one acknowledges or discusses. It will happen. Failure to talk and/or plan for this eventuality could pack a hard financial punch to the surviving spouse. The time to talk or think about it isn’t later. It’s now.

Call our office today. We know it’s not easy, but we can help you and your spouse or partner discuss how to prepare financially for being a widow or widower.

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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 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2245073.1

NJ Property Tax Freeze

Applications for the NJ Senior Property Tax Freeze must be filed by October 31, 2018

 

There are several eligibility criteria:

  • You were age 65 or older as of 12/31/2016
  • You have lived in New Jersey, as a homeowner or renter, since 12/31/2006
  • You have owned and lived in the same home since 12/31/2016
  • You must have paid the full amount of the Property Taxes due on your home:
    • For 2016: By June 1, 2017, and For 2017: By June 1, 2018; and
  • Your total annual income must have been:
    • For 2016: $87,007 or less, and For 2017: $87,268 or less.  (NOTE: Income for this purpose is “all” income received, including Social Security, Pensions, IRA distributions, etc.)

 

If you meet all the above criteria you should file the application.  You can find the forms and instructions here:  https://www.state.nj.us/treasury/taxation/ptr/printform.shtml

 

If you do not meet all of the above criteria then there is no need to file.

 

Please feel free to contact us if you have any questions or reach out to your income tax preparer.

 

 

Source: https://www.state.nj.us/treasury/taxation

Weekly Market Notes – September 4, 2018

Weekly_Market_Notes

For the Week of September 4, 2018

The Markets

The final week of August ended with tariff-related volatility on Wall Street after talks between the U.S. and Canada to renegotiate the North American Free Trade Agreement broke off with no consensus. Stocks ended the day mostly higher. The Dow and the S&P achieved their third straight weekly gains, and the NASDAQ scored its best August return since 2000. For the week, the Dow rose 0.79 percent to close at 25,964.82. The S&P gained 0.98 percent to finish at 2,901.52 and the NASDAQ climbed 2.06 percent to end the week at 8,109.54.

Returns Through 8/31/18 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) 0.79 6.73 21.00 19.16 14.64
NASDAQ Composite (PR) 2.06 17.47 26.15 19.29 17.70
S&P 500 (TR) 0.98 9.94 19.66 16.11 14.53
Barclays US Agg Bond (TR) -0.12 -0.96 -1.05 1.76 2.49
MSCI EAFE (TR) 0.28 -2.28 4.39 7.04 5.73

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.

 

Medicare Isn’t Enough — Sixty-two percent of American seniors (at least age 65) who file for bankruptcy do so because they are overwhelmed by medical expenses (source: “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society,” Deborah Thorne, University of Idaho, BTN Research).

Just Three Stocks — Thirty-seven percent of the S&P 500’s YTD performance of 6.5 percent (total return) through July, 31, 2018, was driven by just three tech stocks in the index (source: S&P Dow Jones Indices, BTN Research).

Up and Up — Seventeen stocks in the S&P 500 gained at least 70 percent in 2017. Six of the 17 stocks gained at least 40 percent YTD through Friday, Aug. 24 (source: BTN Research).

 

WEEKLY FOCUS – Friday Is 401(k) Day

This year marks the 40th anniversary of 401(k) retirement plans. Over the last four decades, private pensions steadily declined, and 401(k) plans became increasingly important. In 1990, 43 percent of private sector employees were covered by some kind of pension plan. Today, they’re few and far between. But while 401(k) plans have grown in popularity, they may not avert a potential crisis among tomorrow’s retirees.

President Trump frequently talks about how well America’s 401(k)s are doing in light of the stock market’s recent performance. But only one-third of workers have one, and just 14 percent of employers offer a 401(k) or other defined contribution plan, according to 2017 research from the Census Bureau.

What’s more, most participants’ balances are inadequate. Last year, data from Fidelity showed the average 401(k) value among those aged 60 to 69 was $167,700.1 This figure is troubling considering the maximum monthly Social Security benefit at full retirement age is currently $2,788, and the average payment is $1,404. On top of that, the average couple retiring at age 65 can expect to pay $280,000 in health care costs in retirement.2

Benefits, costs and investment options vary from one 401(k) plan to another. About one-fourth of employers match 50 percent of employee contributions up to 6 percent of pay. One-third of employers require a year of employment to be eligible for matching.3 Employees must typically work three to five years before fully owning their company’s matching contributions. Fees vary from plan to plan and the funds selected. In addition to administration and investment fees, participants may incur individual service fees.

Many employers now offer post-tax Roth 401(k) options along with traditional pretax 401(k)s. Because it is post-tax, the Roth option allows the owner to achieve tax-free growth without having to take Required Minimum Distributions during retirement. While employees may incur lower fees and greater investment choices in a personal IRA, they should weigh those advantages against whatever match their employer offers.

We can help you or a family member build a full retirement plan that includes a 401(k) and other types of retirement accounts. Call us if you would like to review or create a plan for yourself or a family member. 1https://smartasset.com/retirement/average-401k-balance-by-age

2http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/

3https://work.chron.com/employers-match-401k-15293.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 September 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2231172.1

September 2018 Monthly Outlook – Statistically Speaking

Statistically speaking, September is the worst month of the year for stocks, and generally worse in midterm election years.  However, August is often a bad month too, but this year’s 3% S&P500 gain was the best performance for the month in four years.  If history is a guide, while September in midterm election years show varying results, generally the 4th quarter in these years is positive (16 out of 18 times going back to 1946)

9.4.2018_MONTHLY_OUTLOOK_CHART_1

This year, we have a number of competing factors at work.

On the positive side:

  1. The US economy is on solid ground, with low employment, high consumer confidence and consumer spending.
  2. Interest rates remain low – the 10yr US Treasury @ 2.85% is exactly where it was when this bull market started on March 9, 2009 (2.86%)
  3. In August, the stock market (basis S&P 500) became the longest bull market since WWII.
  4. History shows that bull markets don’t die of old age, they generally end when investors get overly enthusiastic. The previous longest bull market (1990-2000) ended with Federal Reserve Chairman Allan Greenspan warning of “irrational exuberance”.  Since this bull market started in 2009, investors have consistently reduced their exposure to equities while allocating capital just about everywhere else, including record inflows to fixed income.  This has been the most unloved bull market in history.

Market Returns and Fund Flows in Bull Market Periods

9.4.2018_MONTHLY_OUTLOOK_CHART_2

 

On the negative side:

1.      The Federal Reserve is raising interest rates.  If they succeed in slowly raising rates to keep inflation in check, things will be fine.  If they raise too fast they will likely stall the economy.  If they raise too slow, inflation likely rears its ugly head.

2.      The current trade / tariff strategy in Washington could backfire and lead to a trade war.  This would definitely throw a wrench into the economy.

3.      Congress faces another budget deadline in September. Without an agreement, the Federal government will shut down for the third time this year.

4.      European economy is struggling given some troubles in Turkey and Italy.  If this expands to other countries it could impact global growth.

 

Given the above, we remain cautiously optimistic about the economy and financial markets.  We continue to favor stocks over bonds, at least through the end of the year.  We will adjust as circumstances dictate.

 

We hope you find this information helpful.  Please share it with anyone you feel would benefit from it.

 

 

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

·         Summer is over and kids are going back to school  – please be careful on the roads.

 

Sep 3rd             Labor Day

Sept 9th            Rosh Hashana begins – wishing all our family, friends, and colleagues of the Jewish faith a very Happy New Year

Sept 10th          World Suicide Prevention Day – Take a minute, Change a life – look out for those who may be struggling and check in with them

Sept 11th          Patriot Day- honoring those who lost their lives on 9/11/01

Sept 12th          Eloise and my 10th anniversary

Sept 19th        Yom Kippur – G’mar Tov

Sept 21st          International Day of Peace – consider lighting a candle for peace

Sept 22nd         Autumn begins

Sept 30th          Yom Kippur – G’mar Tov

 

Sources:  CFRA, Blackstone, CNBC.com

 

 

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