For the Week of February 24, 2020

The Markets

The three major indexes dropped on Friday and also ended the week lower. Concern over the economic impact of the coronavirus and data indicating U.S. business activity slowed last month led investors to move to safe haven assets like gold and Treasuries. For the week, the Dow fell 1.36 percent to close at 28,992.41. The S&P lost 1.22 percent to finish at 3,337.75, and the NASDAQ dropped 1.55 percent to end the week at 9,576.59.

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, NASDAQ 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. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

Coronavirus Impact — China forecast it would use 25 percent less oil per day in February when compared to its actual usage in February 2019, a drop of 3.2 million barrels a day from 12.9 million barrels to 9.7 million (source: International Energy Agency, BTN Research).

Hard to Enjoy Retirement — 54 percent of American workers have not started a defined contribution retirement plan at work (e.g., a 401(k) plan) or do not have access to a defined benefit pension plan funded exclusively by their employer (source: Center for Retirement Research at Boston College, BTN Research).

Financially Ready? — The life expectancy of a 65-year-old American is 19½ years or 234 months (source: Center for Disease Control, BTN Research).

WEEKLY FOCUS – America Saves Week, Feb. 24-29

According to a recent Bankrate survey, 21 percent of Americans don’t save any portion of their annual income. Twenty percent save 5 percent or less, and only 16 percent save more than 15 percent. No matter where you find yourself, the following psychological tricks may help you increase your savings rate in 2020.

Think big but start small. Break your long-term goals into mini goals, e.g., a target amount you want to save in the next three months. As an added incentive, you might plan a small reward when you reach your immediate goal.

Calculate purchases differently. To weigh how much you really value something you’re tempted to buy, look at its price tag in the number of hours you’d need to work to pay for it. Or, picture a stranger holding the item you’re considering in one hand and the amount of cash it costs in the other. Which is more appealing?

Put off the urge to splurge. It’s easier to delay gratification than deny it. So, wait 24 hours before making small discretionary purchases or 30 days before making bigger purchases. The passion for the item will often wane as time passes. Accelerate your savings and reset your purchasing appetite by designating a few weeks or a month as a period of no unnecessary purchases.

Automate your savings. Since most of us aren’t impulsive savers, we need to be intentional savers – putting money aside before we succumb to temptations to spend. So, increase the amount of your check that goes to your 401(k) or ask your employer to split your direct deposit into your checking and savings accounts.

Make wise purchases. Comparing prices and reading reviews usually results in securing better values and slows impulse buying. Timing is another way to save. When possible, purchase clothes and food in season. Shop for a new computer in April, mattress in May, television in November or home appliance in December.

America Saves Week is an annual reminder to double check your financial stability and encourage you to save. Take the time this week to call our office to set up a review of your retirement plan or to receive help with explaining the importance of savings to younger generations.

https://www.bankrate.com/banking/savings/financial-security-march-2019/

* 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2964203.1

For the Week of February 18, 2020

The Markets

At Friday’s close, stocks were mixed. A rising number of coronavirus cases weighed on investors; a report the White House is considering tax incentives to encourage stock purchases encouraged them. Stocks still posted back-to-back weekly gains. For the week, the Dow rose 1.17 percent to close at 29,398.08. The S&P gained 1.65 percent to finish at 3,380.16, and the NASDAQ climbed 2.21 percent to end at 9,731.18.

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.

Got a New Car — Americans purchased 17 million new vehicles (cars and light trucks) in 2019, down from a record 17.5 million in 2016, but well ahead of the 10.4 million vehicle sales in 2009. American car buyers also purchased 40.4 million used cars in 2019, an all-time record for the United States (source: Statista, BTN Research).

Looking Ahead — 41 percent of 1,903 young adults surveyed in January 2020 (adults between the ages 24-41) have less than $15,000 saved for their future retirement, while 24 percent of those surveyed have more than $100,000 saved for retirement (source: Bank of America Better Money Habits Millennial Report, BTN Research).

Half of All Taxpayers — 50 percent of American taxpayers reported less than $41,740 of adjusted gross income for tax year 2017. 143.3 million tax returns were filed for the 2017 tax year (source: Internal Revenue Service, BTN Research).

WEEKLY FOCUS – Who Will You Trust to Be Your Trustee?

A trust is a valuable tool that can protect your estate long after you’re gone, but it’s critical to choose the right trustee to carry out the plans outlined in the trust.

For many people, the first choice to take on this important responsibility is a trusted relative or friend, who has the best understanding of family dynamics and, in most cases, won’t charge a fee. They should have a basic understanding of investing and be financially responsible themselves. It’s important to be aware of any resentment that may occur if one family member or friend is chosen over another.

You may also consider naming an attorney, accountant, bank or trust company to serve as your trustee.  These types of professionals add structure and oversight to the process, and they cannot legally play favorites with distributions. However, they will cost significantly more than a family member.

When choosing a trust company, be aware there are different types, each offering different types of services. A bank trust company provides services, such as trust accounting, administration and executor services, and may invest the true assets. Advisor-friendly trusts also provide accounting and administration but will delegate the responsibility of choosing an investment advisor to a beneficiary or grantor.

Whether you choose a family member, friend or an outside entity, decide who will be most qualified to manage your trust by considering several questions, such as:

• Will this person put aside their personal feelings and interests and exercise sound judgement?
• Will they treat all beneficiaries impartially?
• Will they take undue risk?
• Will they have the time to dedicate to their responsibilities?

In some cases, it may be best to name multiple trustees or a trustee board made up of trust professionals and family members to serve as co-trustees who will carry out specific responsibilities. If you need help reviewing your estate decisions, please call our office. Although we cannot provide legal or tax advice, we are happy to work with your attorney or accountant.

* 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2956320.1

For the Week of February 10, 2020

The Markets

Despite January’s stronger-than-expected U.S. jobs report, stocks fell Friday amid concern over the impact the coronavirus will have on China’s economy. However, stocks still notched strong weekly gains. For the week, the Dow rose 3.06 percent to close at 29,102.51. The S&P gained 3.21 percent to finish at 3,327.71, and the NASDAQ climbed 4.04 percent to end the week at 9,520.51.

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.

Most in a Few — 10 percent of American households own 84 percent of all stocks in the country, including direct ownership of general securities and indirect ownership through mutual funds and other pooled accounts that are held both in pre-tax and post-tax accounts (source: Survey of Consumer Finances, BTN Research).

Fewer Tools Available — The Fed cut short-term interest rates by 5 percentage points during the nation’s last recession (a downturn that ran from December 2007 to June 2009), an action that could not be replicated today since the Fed’s key short-term rate is 1.75 percent  (source: Federal Reserve, BTN Research).

A Downturn Is Inevitable, I Think? — As of Feb. 1, the United States began its 128th consecutive month of an economic expansion, the longest in our nation’s history based on records maintained since 1854 (source: National Bureau of Economic Research, BTN Research).

WEEKLY FOCUS – Timing Matters!

You’ve probably heard about potential advantages of deferring retirement. Delaying retirement or even working part-time may allow you to add to your savings and postpone dipping into your reserves – giving them more time to grow. And, you can increase your Social Security benefits by 8 percent for each year you wait to draw them from your full retirement age until you turn 70.

But there’s another way your retirement timing can affect your financial well-being. It’s called sequence of returns risk. Negative returns early in retirement can impair a portfolio more significantly than the same returns later in retirement.

Beginning distributions for living expenses during a bear market can seriously impact retirees who may not have the time to recoup losses. Retirees forced to sell some holdings reduce shares that could grow to offset future withdrawals.

If the markets are down when you plan to retire, it may be wise to keep working in order to delay selling depressed investments. But what if you aren’t able to keep working? What if you retire not knowing the markets are about to drop?

It’s best to take steps well before retirement to reduce sequence of returns risk. One popular strategy is to separate assets into a variety of “buckets” or “pools” for different time periods, ranging from safer, more liquid classes to longer term investments with greater growth and risk potential. Even during retirement, advisors typically counsel retirees to keep some money in equities. Stocks’ growth capacity is critical, given increased lifespans and high inflation in unavoidable areas for older Americans, such as health care.

At the same time, you may want to reduce volatility on assets you’ll need to withdraw during your early years of retirement with short-term CDs, money market instruments or fixed-income investments, like annuities or bond ladders. A bond ladder is created with bonds that mature in ascending years, such as one-, two-, three-, four- and five-year periods.

Because every situation is unique, choosing the right mix of equities, fixed income, cash and possibly real estate is complicated. Whether you’re already retired, you’re approaching retirement or it’s a long way off, we can help you create an asset allocation strategy designed to safeguard your 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2945716.1

For the Week of February 3, 2020

The Markets

Fears over the coronavirus and its impact on the global economy, along with sluggish U.S. economic data, suppressed stocks last week. All three major indexes fell more than 1.5 percent Friday and experienced their worst week in six months. For the week, the Dow fell 3.09 percent to close at 28,256.03. The S&P lost 2.98 percent to finish at 3,225.52, and the NASDAQ dropped 2.68 percent to end the week at 9,150.94.

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.

Advantage: Sellers — The number of existing single-family homes for sale has been tracked nationally since July 1982, i.e., for nearly four decades. The total peaked in July 2007, at 3.4 million but has now fallen to its all-time low of 1.22 million in December 2019 (source: National Association of Realtors, BTN Research).

Change in the Law — The newly passed SECURE Act allows Americans to withdraw money from a pretax 401(k) or IRA without paying a 10 percent penalty for an early withdrawal if the funds are used to cover costs related to childbirth or adoption. The withdrawal would be subject to ordinary income tax. Please consult a tax expert for details (source: SECURE Act, BTN Research). 

At a Minimum — 21 states increased their state-mandated minimum wage as of Jan. 1. The highest minimum wage in the nation is $13 an hour in California (source: National Conference of State Legislatures, BTN Research).

WEEKLY FOCUS – The Benefits of a Trust in Your Financial Plan

Remember the old saying: “death and taxes are inevitable?” That’s not entirely true. At least the second part. One of the strategies in financial planning for the future is to lower – or even avoid – paying taxes on accumulated wealth. A tactic you could take to accomplish that might be setting up a trust.

You might be surprised to find there are benefits to setting up a trust beyond tax savings. Trusts allow you to:

• Put conditions on how and when your assets are distributed after your death;
• Reduce estate and gift taxes;
• Streamline distribution of assets and eliminate the cost and publicity of probate court;
• Protect assets from creditors and lawsuits;
• Name a successor trustee to manage your trust after your death; and
• Empower a trustee to manage the trust assets if you become incapacitated.

There are several types of trusts, and it’s important to match the trust type to your situation. Some trusts include credit-shelter trusts (aka bypass or family trust); generation-skipping trusts; qualified personal residence trusts; irrevocable life insurance trusts; and qualified terminable interest property trusts, which can be helpful with blended families.

The most common trust is the revocable living trust in which you would probably want to put most of your assets. Funding a revocable living trust during your lifetime can help keep your assets out of probate, provide privacy and efficiency in settling your estate and provide you full control over the trust assets until your death.

Deciding which type of trust is right for your financial goals and needs can be challenging. Trusts are flexible, varied and complex. Each has advantages and disadvantages. Call our office today to discuss the different types and which would best suit your financial plans.

Securities America and its representatives do not provide tax or legal advice; coordinate with your tax advisor or legal counsel 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 February 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#2934751.1