For the Week of February 3, 2020
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.
|Returns Through 1/31/20||1 Week||YTD||1 Year||3 Year||5 Year|
|Dow Jones Industrials (TR)||-3.09||-0.89||15.79||15.16||13.22|
|NASDAQ Composite (PR)||-2.68||1.99||25.67||17.70||14.57|
|S&P 500 (TR)||-2.98||-0.04||21.68||14.55||12.37|
|Barclays US Agg Bond (TR)||0.87||1.92||9.64||4.63||3.01|
|MSCI EAFE (TR)||-2.10||-2.09||12.10||7.77||5.12|
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