For the Week of August 31, 2020

The Markets

Stocks rose Friday. The Dow erased its losses for the year, and the NASDAQ and the S&P reached new record closes. July’s U.S. consumer spending encouraged investors, along with the Federal Reserve’s announced policy shift to allow inflation to run higher. For the week, the Dow rose 2.64 percent to close at 28,653.87. The S&P gained 3.29 percent to finish at 3,508.01, and the NASDAQ climbed 3.40 percent to end the week at 11,695.63.

Returns Through 8/28/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	2.64	2.03	12.74	12.12	14.22
NASDAQ Composite (TR)	3.40	31.17	50.34	24.30	20.68
S&P 500 (TR)	3.29	9.97	23.86	15.04	14.32
Barclays US Agg Bond (TR)	-0.51	6.60	6.12	5.08	4.27
MSCI EAFE (TR)	1.69	-4.58	7.39	2.35	4.60

Find a New Job — An estimated 33 percent of the pandemic-driven layoffs in the United States that occurred from March through May will be permanent, i.e., the workers will never return to their old jobs at their former employers (source: Brookings Papers on Economic Activity, BTN Research).

It Will Take Time — Economists from the second largest bank in the United States predict the U.S. economy will not recover to its pre-pandemic level until early 2023 (source: Bank of America, BTN Research).

When Demand Drops — In 2019, the world production of crude oil was 101 million barrels a day. The pandemic caused a global collapse in oil consumption, forcing the major oil players of OPEC and Russia to implement an output cut of 9.7 million barrels a day in April. The drop in demand forced U.S. oil producers to cut output by 2.4 million barrels a day since mid-March (source: U.S. Energy Information Administration, BTN Research).

WEEKLY FOCUS – Credit Card Companies Respond to COVID

In these unprecedented times, many companies are coming up with new ways to help those who have experienced economic challenges and to better serve customers whose lifestyles have been altered because of health concerns. Credit card companies are no exception.

Many major credit card companies have added to their existing hardship programs to help customers in financial stress due to the coronavirus. On a case-by case basis, a variety of measures may be approved, such as deferred or lower monthly payments, waived interest and late fees, or increased credit limits.

Consumers who have always guarded their credit rating may worry about asking for a deferment. But if a company agrees to defer your payments, it won’t report those payments as late. However, your credit score could still be damaged if a card balance grows while payments are deferred. So, it’s best to discuss reporting concerns with the company.

If you have overdue payments because of COVID, file a consumer statement with the credit bureau explaining the unique circumstances that led to falling behind and your intention to catch up as soon as possible.

Credit bureaus are also stepping up by allowing consumers to check their credit report once a week at no cost through April of 2021 at AnnualCreditReport.com.

Even if you haven’t experienced income loss this year, you may want to take advantage of other limited time benefits from some credit cards. Among these are:

• giving extra points for restaurant, grocery, or gas purchases
• allowing holders to redeem travel points at grocery stores and restaurants
• providing statement credits for grocery or restaurant delivery services
• offering statement credits for streaming entertainment, wireless phone, or shipping services

To see what your credit card offers, visit its website or call customer service. As with any form of credit, responsible use is crucial. Making your money go farther and protecting your assets are important to us. We can help you evaluate your options for spending, saving, and investing your money to support your financial goals.

For the Week of August 24, 2020

The Markets

Stocks rose Friday, and the NASDAQ and the S&P achieved record closing highs as several pieces of positive news encouraged investors. New reports showed better than expected corporate earnings reports, a surge in home sales and accelerated manufacturing activity. For the week, the Dow rose 0.09 percent to close at 27,930.33. The S&P gained 0.77 percent to finish at 3,397.16, and the NASDAQ climbed 2.69 percent to end the week at 11,311.80.

Returns Through 8/21/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	0.09	-0.59	9.17	11.36	13.89
NASDAQ Composite (TR)	2.69	26.85	42.44	23.39	20.50
S&P 500 (TR)	0.77	6.47	18.44	14.06	13.79
Barclays US Agg Bond (TR)	0.27	7.14	7.24	5.31	4.25
MSCI EAFE (TR)	-0.99	-6.17	4.84	2.03	4.15

There’s Bad, Then There’s Awful — The U.S. economy fell 10 percent in size between March 31 and June 30. The United Kingdom’s economy fell 20.4 percent in size between March 31 and June 30 (source: Office for National Statistics, BTN Research).

Need a Lot of Money — The U.S. government forecasted on Monday, Aug. 3, that it will borrow $4.5 trillion during fiscal year 2020, i.e., the 12 months ending Sept. 30. That total exceeds the $3.8 trillion borrowed over the previous four fiscal years of 2016-2019 (source: Treasury Department, BTN Research).

Being Cautious — The personal savings rate in the United States was a record 33.5 percent in April as Americans reacted to the COVID-19 pandemic outbreak. The personal savings rate in the United States was 7.5 percent in April 2019. The personal savings rate is defined as savings (i.e., after-tax income less consumption spending) divided by after-tax income (source: Department of Commerce, BTN Research).

WEEKLY FOCUS – Keeping Your Eyes on the Goal

As the struggle to control COVID-19 drags on, many of us experience periodic fatigue from distancing, negative headlines and future uncertainties. Staying disciplined when weary is difficult but crucial to short-term financial wellness and long-term financial success. So, follow these guidelines to maintain your focus:

Don’t fixate on market swings. If you have a solid strategy that addresses market volatility, do the right things regardless of how the market acts. That’s not to say you shouldn’t regularly reevaluate your risk levels or consider rebalancing your portfolio, but don’t make decisions based on emotion. And don’t try to time the market; few who do succeed.

Invest prudently. The natural human tendency is to buy lots of stock when prices are rising and to stop buying altogether when prices are on the down swing. But some stock prices may provide a good value if the market drops, and you’ll be able to buy more for the same amount of money. Just remember, it’s generally best not to purchase equities unless you can keep them a minimum of five years.

Thinking about purchasing a different home in a year or two? This may be a good time for some improvement projects on your current home. Most realtors agree you’ll likely recoup these investments: a new garage or front door, a minor kitchen remodel, finishing a basement or updating a bathroom.

Increase your savings. When we’re stressed, it’s natural to buy something fun. But try to keep splurges small and make the most of unique opportunities to save in the current situation. If you’re working from home, you’re likely spending less on gas and clothes. In your free time, you’re probably spending less on dining out, movies, concerts and travel. Try to see how much more you can put in savings because of reduced spending.

Use your time wisely. Improve your culinary skills and reap rewards for years to come as you save on prepared food costs, eat healthier and entertain economically. Earn a professional certification or take a class to improve your desirability as an employee. Or, develop skills and a network to start a business or side gig.

Even difficult times can present real opportunities. If you’re looking for or considering ways to thrive in the midst of the pandemic’s economic fallout, give our office a call.

For the Week of August 17, 2020

The Markets

Stocks ended mostly flat on Friday, with the S&P still failing to achieve a record high. The market appeared to be treading water as investors reacted to modestly improving retail sales and stalled stimulus talks as the Senate adjourned for its August recess. For the week, the Dow rose 1.87 percent to close at 27,931.02. The S&P gained 0.69 percent to finish at 3,372.85, and the NASDAQ climbed 0.09 percent to end the week at 11,019.30.

Returns Through 8/14/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	1.87	-0.68	12.29	10.86	12.54
NASDAQ Composite (TR)	0.09	23.53	43.13	21.50	18.20
S&P 500 (TR)	0.69	5.66	21.07	13.22	12.29
Barclays US Agg Bond (TR)	-0.91	6.85	7.08	5.29	4.32
MSCI EAFE (TR)	2.46	-5.23	7.33	2.27	3.39

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.

 

Tough Year — The number of operating oil rigs in the U.S. (both on land and offshore) as of last Friday, Aug. 7, was 247, down 69 percent from 805 operating oil rigs as of Dec. 31, 2019 (source: Baker Hughes, BTN Research).

Reducing Your Monthly Cost — 64 percent of mortgage applications filed during the week ending Friday, July 31, were current homeowners refinancing existing mortgage debt as opposed to new home purchases (source: Mortgage Bankers Association, BTN Research).

Record Low — The yield on the 10-year Treasury note closed at 0.514 percent last Tuesday, Aug. 4, 2020, within 0.013 percentage points of its all-time record low close of 0.501 percent from March 9, 2020 (source: Treasury Department, BTN Research).

 

WEEKLY FOCUS – The Mixed Blessing of Longevity

Thanks to better nutrition, smarter health choices and medical advances, people now live longer. The average life expectancy for a newborn in 1950 was 68. Today, it is just short of 79.¹ And according to the Social Security Administration, one in four 65-year-olds will live past 90 and one in ten will live past 95.²

Realizing your retirement could last 25 or 30 years is the first step to prepare financially – ideally, starting in your youth to reap maximum rewards of compound growth. Suppose, for example, you begin saving $475 per month when you’re 22 and earn an average annualized return of 8 percent. When you’re 67, you’ll have a $2,379,328 retirement fund. Wait until you’re 42, and that nest egg will only be $450,040.³  But don’t dismay if youth has passed. There is still a lot you can do, such as:

Continue working. If you can, keep working beyond the typical retirement age. This will help you accumulate more wealth, delay using savings and postpone drawing Social Security to let your benefits grow. If you retired early this year because of COVID risks, take heart. The pandemic has also increased remote work opportunities. Consider tutoring, customer service, sales, accounting, tech support or administrative work, just to name a few.

Protect your health. It’s no secret healthcare costs have grown disproportionately. It’s estimated the average couple will need $295,000 for medical expenses in retirement (not counting a potential need for long-term care).⁴ So, anything you can do to safeguard your health is bound to pay off in quality of life and financial savings.

Invest wisely. Although inflation has been low since the 2008 recession, it still adds up over time. Keeping all your money in overly low-risk (and likely low return) investments may not actually be wise over the long-term. Particularly in a low-interest environment, it’s difficult to grow ultra-low-risk investments. Investing a portion of funds you won’t need for a decade or more in the market provides growth potential while giving you more time to ride out market volatility.

Whatever your age, there are always ways to improve your situation. If you’d like help creating or reviewing a written strategy for retirement saving, investing or distribution, contact our office today.

¹https://www.macrotrends.net/countries/USA/united-states/life-expectancy#:~:text=The%20current%20life%20expectancy%20for,a%200.03%25%20decline%20from%20201

²https://www.cnbc.com/2018/01/12/failing-to-plan-for-longevity-can-hurt-your-finances.html

³https://blog.massmutual.com/post/swp-save-retirement

⁴https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

* 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 August 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3204664.1

For the Week of August 10, 2020

The Markets

Stocks were mixed Friday, thanks to a slightly better-than-expected July jobs report and gridlock between Democratic leaders and the White House over the next stimulus package. In other news, the Trump administration placed sanctions on 11 government officials in China and Hong Kong, and the President issued restrictions on Chinese social networks TikTok and WeChat in the U.S. over security concerns. For the week, the Dow rose 3.88 percent to close at 27,433.48. The S&P gained 2.49 percent to finish at 3,351.28, and the NASDAQ climbed 2.51 percent to end at 11,010.98.

Returns Through 8/07/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	3.88	-2.50	8.17	10.02	12.27
NASDAQ Composite (TR)	2.51	23.42	41.50	21.21	18.21
S&P 500 (TR)	2.49	4.93	18.54	12.75	12.30
Barclays US Agg Bond (TR)	0.10	7.83	8.56	5.65	4.48
MSCI EAFE (TR)	1.95	-7.50	3.95	0.97	2.61

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.

 

They Will Have to Cut Back — An estimated 55 percent of working-age households today are not saving enough money before retirement to allow them to maintain their current standard of living into their retirement years (source: Center for Retirement Research, BTN Research).

Spending Spree — Since cutting short-term interest rates to near zero on March 15, the Fed has purchased $1.7 trillion of Treasuries through Wednesday, July 29. The Fed now owns $4.3 trillion of U.S. government debt or 25 percent of the total Treasury securities outstanding (source: Treasury Department, BTN Research).

Bumpy Skies — The March 27 CARES Act allocated $25 billion to 11 U.S. airlines to be used for the payroll and benefits of the individual airline companies. The legislation prohibits the 11 airlines that received CARES Act money from implementing any layoffs until Oct. 1 (source: CARES Act, 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. There are income limits for contributing to individual Roth IRAs. There are also income limits for pretax contributions to traditional IRAs if you or your spouse has a work retirement plan. But if you are still employed, you may make pretax contributions to your employer’s 401(k) regardless of your income. And maximum contributions are considerably higher than for IRAs. For 2020, you can contribute $19,500 to your 401(k) if you’re under 50 or $26,000 if you are 50 or older. A potential employer match is an added bonus.

Postpone RMDs. Because of COVID, required minimum distributions (RMDs) are suspended for 2020. Normally, you must begin taking RMDs from a traditional IRA when you reach age 72. But as long as you work the entire year as an employee for the company that sponsors your 401(k) and you or a family member 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 leave your employer. In 2020, you may withdraw up to $100,000 without a penalty regardless of age or employment status for a COVID-related hardship.

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. If you leave your job, you may need to repay it in a very short time.

Just as there are benefits and drawbacks for different types of retirement accounts, there are pros and cons for consolidating accounts. Our office would be happy to help you decide what type of account seems best for your situation or weigh consolidating your existing accounts.

Securities America and its financial professionals do not provide tax advice. Consult a tax professional for specific details.

* 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 August 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3195903.1