Student Loan Forbearance Extended Through 1/31/21

Folks,

On 12/4/20 the U.S. Secretary of Education Betsy DeVos announced an extension on the federal student loan forbearance period. Federal student loan borrowers will not be expected to make payments through January of next year, 2021. Non-payments will continue to count toward the number of payments required under an income-driven repayment plan, a loan rehabilitation agreement, or the Public Service Loan Forgiveness program.

During this forbearance period any payments will go directly to the loan principal which will lower your interest payment in the future. We urge our clients to take advantage, if financially feasible, of this opportunity and pay down the principle on your loans.

This article was posted by the U.S. Department of Education:

https://www.ed.gov/news/press-releases/secretary-devos-extends-student-loan-forbearance-period-through-january-31-2021-response-covid-19-national-emergency

If you or anyone know anyone you know needs help understanding their student loan status please feel free to contact us.

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.

Weekly Market Notes – December 8, 2020

For the Week of December 7, 2020

The Markets

Stocks rose Friday despite a disappointing November jobs report and rising coronavirus cases. Expectations of a new fiscal relief bill helped all three major indices close at record highs. For the week, the Dow rose 1.16 percent to close at 30,218.26. The S&P gained 1.72 percent to finish at 3,699.12, and the NASDAQ climbed 2.14 percent to end at 12,464.23.

Returns Through 12/04/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)1.168.2811.8710.0913.82
NASDAQ Composite (TR)2.1440.1046.8423.7920.67
S&P 500 (TR)1.7216.5021.0814.1014.35
Barclays US Agg Bond (TR)-0.426.846.785.204.28
MSCI EAFE (TR)1.025.419.254.216.79
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.

Most Are Current — One in 13 home mortgages nationwide (7.65 percent) were at least one monthly payment delinquent as of Sept. 30. Just one in 25 home mortgages nationwide (3.97 percent) were at least one monthly payment delinquent as of Sept. 30, 2019 (source: Mortgage Bankers Association, BTN Research).

November to Remember — With one trading day remaining in November, the S&P 500 had gained 11.4 percent month-to-date (total return) through Nov. 27, a performance better than 99.7 percent of the last 360 months (source: BTN Research).

Primary Household Assets — 62 percent of the average net worth of an American household comes from just two assets – the equity they have built up in their home and the value of their retirement accounts (source: Census Bureau, BTN Research).

WEEKLY FOCUS – Gifts With Lasting Impact

Looking for gifts that will be appreciated long after the holiday decorations are stashed away for next year? Here are a few ideas for presents with lasting impacts.

For younger children or teens: Encourage an interest in investing with a gift card from Stockpile.com. For $25, $50, or $100, you can purchase fractional shares of stock from popular companies like Pepsi, Facebook, Apple, and Disney. The site offers physical gift cards you can put in Christmas stockings and e-gifts you can send instantly. Recipients redeem the cards on the site, which is an online brokerage. Twenty-five percent of Stockpile’s customers are kids and teens.

Help finance future qualified educational expenses for a loved one by contributing to (or establishing) a 529 savings plan. Although contributions aren’t pretax, earnings aren’t taxed. And some states will let you deduct a portion of contributions from your state taxes. Once the plan is set up, sites such as GiftofCollege.com and LeafSavings.com offer gift cards that make it easy to contribute directly to a 529 account.

For the older teenager with earned income: Encourage a teen to think about the future by helping them start a Roth IRA. You can gift money to fund their IRA for as much as they earn up to the $6,000 limit for 2020.Stocks, U.S. Savings Bonds, and CDs also make good gifts by promoting financial literacy in young investors.

For adult children: If a family member dreams of starting their own business, provide great insights on running a business, franchising, and meeting startup challenges with a subscription to Inc. or Entrepreneur. Magazines like Forbes, Bloomberg Businessweek, or Money might fuel an interest in investing.

Or give a gift of time. Younger adults just starting out might not have enough financial resources for serious investing – but they do need a financial strategy and could benefit from the guidance of a financial professional. Even an older adult child could benefit from a financial tune-up.

While you may be doing your best to teach your children and grandchildren about personal finances, confirmation from an outside source could reinforce your message. We’d be happy to educate them on the importance of setting long-term goals, creating a budget, and setting up a financial plan.

We 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 December 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3359282.1

Weekly Market Notes – November 30, 2020

For the Week of November 30, 2020

The Markets

Stocks rose on a shortened, post-Thanksgiving Friday as retailers kicked off the holiday shopping season and coronavirus cases rose. The S&P and NASDAQ closed at record highs Friday, and the Dow closed above 30,000 for the first time earlier in the week. For the week, the Dow rose 2.25 percent to close at 29,910.37. The S&P gained 2.30 percent to finish at 3,638.35, and the NASDAQ climbed 2.97 percent to end at 12,205.85.

Returns Through 11/27/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)2.257.048.6810.8013.64
NASDAQ Composite (TR)2.9737.1641.5022.3120.23
S&P 500 (TR)2.3014.5217.5314.0213.98
Barclays US Agg Bond (TR)-0.037.287.215.304.34
MSCI EAFE (TR)2.234.347.203.786.40
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.

Why Go? — 43 percent of recent college graduates with jobs (under the age of 28) surveyed in September are working in jobs that typically do not require a college degree (source: Federal Reserve Bank of New York, BTN Research).

People Are Spending Again — Retail sales in the United States were down on a month-over-month basis for three consecutive months (February through April) but have rebounded and have increased on a month-over-month basis for the last six months (May through October) (source: Census Bureau, BTN Research).

Not Coming Back — In the six months from February 29 to August 31, 163,735 U.S. businesses closed their doors, including 97,966 businesses (60 percent) that are likely closed for good (Source: Yelp Economic Average, BTN Research).

WEEKLY FOCUS – December 1 Designated Giving Tuesday

Whether it’s due to the holiday spirit or taking advantage of tax deductions before it’s too late, one-third of annual charitable donations are made in December.1 Just as you try to be a mindful shopper who avoids impulse purchases, it’s important to be a careful giver who thoughtfully evaluates emotion-tugging appeals. The following tips can help.

Plan ahead. You can’t buy gifts for every friend and relative, and you can’t donate to every worthy cause. So consider what areas you’re most passionate about. And don’t be like two-thirds of donors, who don’t do any research before giving.2 Examine prospective charities and choose groups who address your concerns most effectively and efficiently. Check out large organizations on charity rating sites like GuideStar.org, CharityNavigator.org, or the Better Business Bureau Wise Giving Alliance site, Give.org. Evaluate smaller, local nonprofits by reading their annual report, audited financial statement, and IRS Form 990. Look for entities that spend 75 percent of their budgets directly on programs. You might even volunteer and observe their programming in action.

Concentrate support. After you’ve identified charities with reputations for performing well, narrow your choices. Although diversification works well when investing in stocks, it’s less effective when investing in charities. Giving more to fewer organizations allows them to spend less on fundraising, keep operating costs low, and plan strategically.

Budget for giving. Once you’ve chosen your favorite nonprofits, decide how much you want to give and make room in your budget. See if you can make your gifts go farther by participating in a matching program through your employer or a generous donor.

Be tax smart. You can’t deduct donations unless you itemize your tax return and give to a 501(c)3 tax-exempt entity. (To check whether a charity qualifies, visit the IRS webpage, apps.irs.gov/app/eos). If you receive something in return for your gift (e.g., a dinner or a book), its value must be subtracted from your donation. A cancelled check or credit card statement is adequate proof for gifts under $250, but you’ll need a receipt for gifts above that.  

For more information on targeting your charitable efforts, give our office a call. We can also work with your tax advisor to help you and your causes get the most benefit from your gifts.

We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

1,2 https://neonone.com/resources/blog/year-end-giving-statistics/

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 November 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3348652.1

Weekly Market Notes – November 23, 2020

For the Week of November 23, 2020

The Markets

Stocks closed lower Friday amid rising coronavirus cases, increased state-level shutdowns, and fiscal stimulus developments. On Thursday, U.S. Treasury Secretary Steven Mnuchin said he would allow pandemic-relief lending programs to expire at the end of the year. For the week, the Dow fell 0.65 percent to close at 29,263.48. The S&P lost 0.73 percent to finish at 3,557.54, and the NASDAQ climbed 0.25 percent to end the week at 11,854.97.

Returns Through 11/20/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.654.697.6810.2313.12
NASDAQ Composite (TR)0.2533.2140.3121.6419.64
S&P 500 (TR)-0.7311.9516.6013.4513.49
Barclays US Agg Bond (TR)0.597.317.265.414.37
MSCI EAFE (TR)1.872.065.713.505.83
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.

More Bonds Than Stocks — As of June 30, the U.S. stock market was $33 trillion in size. As of that same date, the U.S. bond market was $50 trillion in size (source: Wilshire, SIFMA, BTN Research). 

Bulls — 56 percent of investors surveyed as of Nov. 11 are bullish on U.S. stocks for the upcoming six months, the highest percentage recorded in this weekly survey since Jan. 3, 2018 (source: Amer. Assoc. of Individual Investors, BTN Research).

Taxes — To take deductions on Form 1040, a taxpayer can use the standard deduction or the taxpayer can itemize deductions if the latter is greater than the former. The standard deduction will be $25,100 for married couples filing jointly and $12,550 for individuals in 2021. Please consult a tax expert for details (source: IRS, BTN Research).

WEEKLY FOCUS – Safe Holiday Shopping in 2020

In a year unlike any other, holiday shopping is sure to look different as well. According to Deloitte’s 35th annual holiday shopping survey, the average household expects to spend $1,400 this season, 7 percent lower than last year. Participants cited economic worries for reigning in their overall spending and safety concerns for reducing travel and socializing outside the home. Not surprisingly, over half plan to do more online shopping.

Unfortunately, increased online shopping leads to increased online scams. Here are a few tips to follow if you’re considering a purchase off the beaten path.

While online shopping may offer fewer impulse-buying temptations than in-store experiences, it’s still important to create a disciplined budget for gift giving. From holiday spending to college funding and retirement planning, our office can be a resource for your financial needs. Call us for assistance when you need to create or update a plan for achieving your financial goals.

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 November 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3342705.1

Weekly Market Notes – November 16, 2020

For the Week of November 16, 2020

The Markets

Stocks rose Friday amid upbeat earnings reports and a surge in virus cases. Positive vaccine news helped the Dow and the S&P achieve strong weekly gains. On Monday, Pfizer reported its vaccine proved over 90 percent effective in its trial. For the week, the Dow rose 4.19 percent to close at 29,479.81. The S&P gained 2.21 percent to finish at 3,585.15, and the NASDAQ dropped 0.53 percent to end the week at 11,829.29.

Returns Through 10/13/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)4.195.378.6210.4914.04
NASDAQ Composite (TR)-0.5332.8840.7821.7720.44
S&P 500 (TR)2.2112.7718.0913.7214.40
Barclays US Agg Bond (TR)-0.146.687.295.274.28
MSCI EAFE (TR)3.890.183.652.925.96
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.

Bad but Not That Bad — The March 27 CARES Act included $139 billion of relief for the 50 U.S. states. From Feb. 29 to Aug. 31, the tax revenue collected by all U.S. states was down $30 billion over the same six-month period from a year earlier. When the CARES Act was being debated in Congress, U.S. governors requested financial support of $500 billion from lawmakers (source: National Governors Association, BTN Research).

Many Can’t Wait — An American worker may begin receiving a monthly Social Security retirement benefit as early as age 62, albeit at a reduced level from what is available at one’s full retirement age. Just under 50 percent of American blue-collar workers take their retirement benefits at age 62, while only 38 percent of white-collar workers begin their retirement benefits early (source: Center for Financial Security, December 2019, BTN Research).

Down, But Getting Better — From a February peak of 158.8 million jobs nationwide, the United States was down 9 million jobs to 149.8 million workers as of the end of October (source: Department of Labor, BTN Research).

WEEKLY FOCUS – Maximizing Your Employee Benefits

If you’re among the 49 percent of Americans who receive employer-sponsored health care coverage, you may have already received information on your company’s open enrollment. In previous years, you might not have taken much time to review your company’s options. But the current pandemic underscores the importance of securing the best possible coverage and value.

Even before COVID hit, workers’ average single deductible rose to $1,644 in 2020 – almost double from 10 years ago. And typical annual family premiums under employer-sponsored plans rose 4 percent from 2019 to $21,342. During the pandemic, many of us have postponed tests, routine care, and procedures. If much of that deferred care is scheduled in 2021, PwC’s Health Research Institute projects medical costs could rise as much as 10 percent above pre-coronavirus levels.1

Two ways to fund some of these rising costs are a pretax Health Savings Account (HSA) or a Flexible Spending Account (FSA).

To set up an HSA, individuals must have a qualifying high-deductible health plan (HDHP). They control their HSA and may roll contributions over from year to year. To qualify in 2021, an HDHP must have a minimum deductible of $1,400 for individuals or $2,800 for families. The maximum limits for out-of-pocket costs are $7,000 for an individual or $14,000 for a family.

In 2021, workers with an HDHP can contribute $3,600 for themselves (plus $1,000 if they’re 55 or older) or $7,200 for their family. Once enrolled in Medicare Part A or B, individuals can no longer contribute pretax dollars to an HSA.

FSAs are owned by the employer; this means you may forfeit unused contributions if you leave your job. At year’s end, unused funds do not automatically carry over. Depending on the policy, an employee forfeits them, has a few-month grace period to use them, or is allowed to carry up to $550 (for 2021) into the next year. The maximum amount an employee can contribute in 2021 is $2,750.  Medicare recipientsmay contribute to their employers’ FSA.

Need help choosing the best health care options for your family? I’m happy to review these crucial elements of your financial plan with you.

1 https://www.cnbc.com/2020/11/02/5-things-to-watch-out-for-during-open-enrollment-amid-coronavirus.html

*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 November 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3332238.1

Weekly Market Notes – November 9, 2020

For the Week of November 9, 2020

The Markets

Amid uncertainty surrounding the presidential election, U.S. stocks closed mostly flat Friday. But Wall Street saw its best weekly gains since April. For the week, the Dow rose 6.89 percent to close at 28,323.40. The S&P gained 7.36 percent to finish at 3,509.44, and the NASDAQ climbed 9.05 percent to end the week at 11,895.23.

Returns Through 11/06/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)6.891.135.508.8712.27
NASDAQ Composite (TR)9.0533.5942.8021.8319.54
S&P 500 (TR)7.3610.3316.2612.8313.08
Barclays US Agg Bond (TR)0.496.837.245.144.35
MSCI EAFE (TR)8.11-3.57-0.531.284.79
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.

Best Ever — The U.S. economy, expressed as an annualized result, rose a record 33.1 percent in the third quarter of 2020. The economy, as of Sept. 30, is actually only 7.41 percent larger than the size of the economy as of June 30 after removing the impact of inflation. A 7.41 percent gain occurring for four consecutive quarters, equals a 33.1 percent annualized advance (source: Department of Commerce, BTN Research).

The Most Paid — The maximum Social Security benefit paid to a worker retiring at full retirement age in 2021 is $3,148 per month, more than double the $1,536 per month maximum benefit paid in 2001 (source: Social Security BTN Research).

Not All Income — The maximum taxable wage base subject to the Social Security payroll tax will be $142,800 in calendar year 2021. An estimated 82.5 percent of earnings of all U.S. workers will be subject to the Social Security payroll tax next year, a levy that is 6.2 percent for employees and 6.2 percent for employers (source: 2020 Trustees Report, BTN Research).

WEEKLY FOCUS – Long Term Care Awareness

Since 2001, November has been designated Long Term Care Awareness Month, a time to educate Americans on the growing need for long term care (LTC) and potential ways to pay for it. The American Association for Long Term Care Insurance (AALTCI) estimates 14 million citizens currently require long term care support services and predicts that number will grow to 27 million by 2050.1

It’s no secret long term care can be very expensive. According to Genworth’s 2019 Cost of Care survey, the average monthly costs are $7,513 for a semi-private nursing home room, $4,051 for a one-bedroom assisted living apartment, and $4,385 for a homemaker/health aide (at 44 hours a week).Individuals pay for these expenses in a variety of ways.

Long term care insurance is usually most cost effective if purchased before turning 60. According to AALTCI, the average annual premium in 2020 for a healthy couple, both 55-years-old, is $3,050.3 Often more affordable, short-term insurance typically pays $100 to $200 a day for healthcare coverage for a year or less. The AALTCI reports an average monthly premium at age 65 is $105.4 These policies may be easier to obtain and have a short or no elimination period.

People who dislike the idea of paying premiums for something they may never use sometimes turn to an annuity with a long term care rider, a deferred fixed annuity (which doesn’t pay distributions until a certain age is reached), or a life insurance policy with an LTC rider or accelerated death benefit riders, which can be used for long term care.

Still other individuals prefer self-funding potential LTC needs. Considering the average nursing home stay is over two years, this option requires discipline and good fortune. Maximizing yearly contributions to HSA and IRA accounts can help.

While all of us hope we never need long term care, it’s best to plan for the unplanned. I would be happy to meet with you to review your plan for long term care funding and discuss changes you might consider to prepare for this possibility.  

1 https://www.aaltci.org/about/long-term-care-awareness-month-2020.php

2 https://www.genworth.com/aging-and-you/finances/cost-of-care.html

3 https://www.aaltci.org/news/long-term-care-insurance-association-news/2020-long-term-care-insurance-price-index-released-for-age-55

4 https://www.aaltci.org/short-term-care-insurance/

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 November 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3321975.1

Election Recap – Let’s Make a Deal!

Having experienced nearly every other type of intrigue this year, we find ourselves now in the midst of a contested Presidential election.

Going into the election, any number of scenarios were possible, though the market seemed to have been pricing in a so-called “blue wave”, a Democratic sweep of the White House, Senate and House. The belief was that a Democratic agenda would include a robust stimulus package of greater than $2 trillion, followed by a large tax-hike and increased social spending.

It now appears clear that Joe Biden will be the next President, the House stayed in Democratic hands albeit with a smaller majority, and the Senate remains in Republican hands, at least until the January 9, 2021 special elections in Georgia.

The financial markets cheered this outcome with a nice 5% rally post-election last week.  We may see some volatility over the next several weeks as vote recounts occur in a couple of states and lawsuits by President Trump and Republicans work through the legal system.  The likelihood of any of that changing the outcome are quite slim. 

It’s our belief that the media cares a lot more about elections than markets. True, major policy shifts can have an outsized short-term impact on markets as sectors and asset classes get re-priced. In the long-run, however, the market has a tendency to shrug off changes in political leadership, and focus more on the ability of corporate America to grow earnings.

During the transition period – now through Inauguration on January 20, 2021 – the US still faces some serious challenges:  (1) Covid cases are spiking to over 125,000 a day; (2) the economic recovery seems to be slowing due to this spike in the virus; (3) because of this slowdown we need a stimulus bill passed sooner rather than later; (4) the government needs to approve a spending bill by December 11, 2020 or face a shut-down.  The risk here is that President Trump’s challenge to the election results drags out (the 2000 election wasn’t decided until 12/8/2000) and that Congress can’t/won’t compromise and pass stimulus and spending bills during the transition period.  This would definitely set the economy back and mean a terrible holiday season for those dealing with Covid and those unemployed because of it.  

So now let’s turn to the future under a President Biden with a split Congress.   Let’s Make a Deal!

While Washington DC is a politically toxic city and we just had several years of hyper-partisanship, there is a glimmer of hope that Biden and McConnell will have a cordial and productive relationship.  They worked together for 24 years in the Senate, back in the 80’s and 90’s, when there was more willingness to compromise.  They even worked together when Biden was Vice President under Obama and served as that administration’s point person with the Senate.  By most accounts, they have a good relationship. McConnell was the only Republican member of Congress to attend Beau Biden’s funeral.

Both of them are known as master deal-makers, with extraordinary  institutional knowledge of the Senate. They know how to get things done. By contrast, neither Barack Obama nor Donald Trump were comfortable dealing with the Senate.  However, in order to get much done, both Biden and McConnell may have to tilt toward the center. There’s a decent chance for things like a stimulus bill or infrastructure spending.

So will there be nothing but gridlock? Maybe not. There may be surprising deal-making between these two old adversaries, who surely realize that they may have to cooperate if they want to get anything done.  

As we had no bias going into the election, your portfolios were positioned for whatever outcome might ensue. Our strategies are designed to pay off over years, not weeks or months. We will be watching closely as things change over coming weeks. If the facts change, our decisions may change. Until then, our diversified allocations continue to limit risk, offer the potential for relative returns, and allow us to stay open to changing circumstances.

Feel free to reach out if you have any questions.  Also, please share this update with anyone who you feel it would benefit.

Sources:  Nottingham Advisors, Ivy Investments

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.

Weekly Market Notes – November 2, 2020

For the Week of November 2, 2020

The Markets

Stocks fell sharply Friday, led by major tech shares. The S&P and the Dow saw their biggest weekly losses since the March sell-off. Rising coronavirus cases, stalled stimulus talks, and a looming presidential election troubled investors. For the week, the Dow fell 6.47 percent to close at 26,501.60. The S&P lost 5.62 percent to finish at 3,269.96, and the NASDAQ dropped 5.50 percent to end at 10,911.59.

Returns Through 10/30/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-6.47-5.380.346.7411.12
NASDAQ Composite (TR)-5.5022.5032.8418.7217.93
S&P 500 (TR)-5.622.779.7110.4211.71
Barclays US Agg Bond (TR)-0.046.326.195.064.08
MSCI EAFE (TR)-5.51-10.80-6.86-1.242.85
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.

Double in 30 Years — It took $1,961 in September 2020 to have the same purchasing power as $1,000 in September 1990 (source: CPI Inflation Calculator, Bureau of Labor Statistics, BTN Research).

No Boss — 20 percent of American workers between the ages of 18-49 are self-employed. 46 percent of American workers between the ages of 65-69 are self-employed (source: National Bureau of Economic Research, September 2019, BTN Research).


Little Short of Cash — 17.1 million U.S. households were behind on their monthly rental payment or their monthly mortgage payment as of Sept. 28. That’s 13.5 percent of the 126.8 million households in the country (source: Census Bureau, BTN Research).

WEEKLY FOCUS – Recognizing Family Caregivers

November has been named National Family Caregivers Month to honor parents, adult children, and spouses who selflessly care for loved ones afflicted with illnesses, disabilities, traumatic injuries, or the effects of aging. According to a study by the National Alliance for Caregiving and AARP, the number of family caregivers grew by 9.5 million from 2015 to 2020. As a result, one in five Americans are now serving as a family caregiver.1

As medical advances prolong lives and turn once-deadly conditions into disabilities, chances of becoming a caregiver for an older family member dramatically increase. Elder caregiving is often a rewarding act of service as well as a demanding sacrifice. In contrast to caring for children, care requirements for older adults can go from zero to 100 percent overnight. Unfortunately, few programs support those caring for the elderly who often juggle multiple responsibilities for which they may feel ill-equipped.

In addition to the mental and physical challenges, the caregiver’s finances may be impacted dramatically – particularly if the role requires them to reduce work hours or stop working entirely. They may lose employer-provided health care coverage, and their lost wages could in turn reduce their retirement savings and Social Security benefits. Middle-aged women who leave jobs to care for an aging parent may find it difficult to re-enter the workforce. Recent research suggests the average female caregiver loses more than $324,044 in wages and Social Security benefits when caregiving during her prime working years.2

Depending on the type and degree of the condition producing the need for care, a variety of solutions may lessen the burden on family members. An older individual might be able to live independently with the help of a visiting nurse, home health aide, or homemaker. A caregiver may be able to continue working if their relative is able to participate in an adult day care. But at some point, assisted living or long-term care may become unavoidable. 

Financial issues related to caring for a loved one can be complicated and difficult to predict. A financial professional can suggest things you can do now in order to be financially prepared should a loved one require care.

1 https://www.caregiving.org/caregiving-in-the-us-2020/2 https://www.marketwatch.com/story/the-heartbreaking-stories-of-some-of-americas-435-million-unpaid-adult-caregivers-2018-07-20

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 November 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3311989.1

November 2020 Monthly Outlook – The Big 3

“Life is not about waiting for the storm to pass, it is about learning to dance in the rain.” – Unknown

Right now the Big 3 –  Covid, Election, Stimulus – are making for one heck of a storm.  I definitely have my dancing shoes on!

Let’s look at the Big 3 one at a time:

Covid:

Sadly, we are seeing a significant spike in Covid both here and globally.  While most experts anticipated an uptick in the fall flu season, the magnitude and speed of the uptick is greater than most expected. Just this week France announced a new round of mandatory lock-downs, Germany is closing bars, restaurants and theatres for a month, and Chicago is banning indoor dining/drinking and put a curfew on non-essential businesses.

source: Strategas

The US economy had been rebounding quite nicely from the deep contraction in the second quarter of this year but this recent uptick in Covid is starting to impact consumer behavior again.   On October 18, 2020, TSA air passenger throughput had just surpassed 1,000,000 daily for the first time since March.  With numbers like that, it seemed as though the re-opening track was running relatively smooth.  Unfortunately, the 10 days  following the million passenger reading weren’t nearly as strong.  For ten straight days, the total number of daily passengers on US airlines have been lower than the same day a week before.  That’s the second-longest streak of consecutive daily week/week declines since the start of the pandemic. 

The size of the week/week declines has been relatively small on a percentage basis, so it’s not as though air traffic is crashing to a halt, but if the million passenger milestone was a positive trend towards reopening, the slowdown that has followed it suggests that rising case counts have caused Americans to hunker down a little bit.  That’s the kind of environment we find ourselves in these days where a real-time indicator of economic momentum can indicate a positive trend at one point and then one week later it totally contradicts itself.   Source Bespoke Investments

Election:

Investors tend to conflate their anxiety about politics with anxiety about the financial markets. Although investors are inclined to believe that election outcomes will dictate what happens in the markets and their portfolios (and this may, in fact, be true in the very short-term), the reality for investors is that the future of the market is less sensitive to elections than it is to the fundamental drivers of stock prices including: Corporate profits; inflation; interest rates; job market conditions, consumer sentiment.

The good news for investors is that, regardless of who wins the election, all of these fundamental market drivers generally support stock prices in the intermediate term (one to four years). The Fed seems likely to keep interest rates low until the economy is back at full employment (probably sometime after 2023).  Although the Democrats and Republicans have different visions of coronavirus relief/fiscal stimulus with very different elements and different sizes, both parties recognize the need for incremental assistance for unemployed workers and struggling businesses to keep the pandemic-induced recession from feeding on itself. Despite everything that has happened in 2020 the US consumer has a generally positive outlook:

Source: Capital Group, Election uncertainty looks increasingly certain. Unified government indicates White House, House of Representatives and Senate are controlled by the same political party. Unified Congress indicates House and Senate are controlled by the same party, but the White House is controlled by different party. Split Congress indicates House and Senate are controlled by different parties regardless of White House control.

To be clear, we do not mean to suggest that this election does not matter. On the contrary, the consequences of this election may be as—or more—important than any US presidential election in living memory, just not for whether investors should maintain or change the asset allocation of their portfolios.

Stimulus, Stimulus, Stimulus – All That Matters Near-Term
Whether or not it is the right move long term will be determined later, but unfortunately, the economy does not appear to be strong enough to stand on its own. If the spigot turns off,  real troubles will emerge for equities and the financial sector in particular.  Congress will likely provide additional stimulus once the political pressure of the election is past. The issue is timing.  If the election results in status quo (Republicans win White House and Senate, Democrats win House) we likely get a stimulus bill sooner, but smaller – probably before the end of the year.  If the Democrats sweep the election, we likely get a much bigger stimulus package although it probably doesn’t happen until after the inauguration in late January 2021, as Republicans will have no motivation to act during the lame duck period.  If Biden wins Presidency but Republicans keep control of Senate, sadly I think we get a very small stimulus package, if any, as political gridlock will be in full force.

To recap, delayed or contested election results could fuel short-term market volatility.   Because of the expected surge in mail-in voting due to the pandemic, it’s possible the election results will not be known on election night and a complete vote count may not be available for days or weeks.   While the election may roil markets in the short term, the pace of the economic recovery and the course of the coronavirus pandemic are likely to be more important to stock market returns than who ultimately controls the White House and Congress.

Even though the spread of the virus seems to be accelerating in the United States, and Europe seems to be in the midst of a second wave of infections, progress toward a vaccine continues to hold out hope that one day our work lives and social lives will eventually return to something closer to ‘normal.’

Let’s stay hopeful and keep dancing in the rain!

Please feel free to share this report with family, friends and colleagues.  We appreciate your introduction to anyone who you feel we can help.

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

  • November is National Diabetes Month.   Please consider reaching out to a family member or friend who is dealing with this very tough disease.

November 1st           Healthcare open enrollment – runs through 12/15/18  – for coverage starting Jan 1, 2018  

                                    Note: Medicare open enrollment started 10/15/18 and end 12/7/18

November 1st           Set those clocks back

November 3th           Election Day  – be sure to vote

November 11th         Veterans Day – says thanks a Vet

November21st         Great American Smokeout – encourage a smoker to quit

November 26th        Thanksgiving – have a wonderful holiday 

Best regards,

Jim

Sources:  Charles Schwab, Fidelity, Bespoke Investments, Strategas

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.

Weekly Market Notes – October 26, 2020

For the Week of October 26, 2020

The Markets

Stocks ended a downbeat week mixed as investors followed officials’ comments on the status of another stimulus bill. Although unemployment benefits provided by the CARES Act ended July 31, the White House and lawmakers have not been able to agree on a new package. For the week, the Dow lost 0.90 percent to close at 28,335.57. The S&P dropped 0.51 percent to finish at 3,465.39, and the NASDAQ fell 1.06 percent to end the week at 11,548.28.

Returns Through 10/23/201 WeekYTD1 Year3 Year5 Year
Dow Jones Industrials (TR)-0.901.178.149.3112.64
NASDAQ Composite (TR)-1.0629.6443.5921.8419.38
S&P 500 (TR)-0.518.8817.5412.7313.06
Barclays US Agg Bond (TR)-0.426.366.725.114.02
MSCI EAFE (TR)0.11-5.60-0.230.753.96
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.

It’s About Time — Americans have reduced their outstanding balances on their revolving debt, e.g., credit card debt and home equity loans, from March through and including August (source: Federal Reserve, BTN Research).

More Than Twice as Large — The U.S. government had a record $3.13 trillion deficit during fiscal year 2020, smashing the previous record deficit of $1.41 trillion set 11 years ago during fiscal year 2009. The deficit was the difference between $3.42 trillion of tax receipts and $6.55 trillion of outlays (source: Treasury Department, BTN Research).

Cashing In — The median sales price of an existing home sold in the United States in August ($310,600) is the highest ever recorded and is up 11 percent in the last 12 months (source: National Association of Realtors, BTN Research).

WEEKLY FOCUS – Future Retirees Face New Challenges

Preparing for retirement is more complex than it used to be for obvious and not-so-obvious reasons. The most obvious is longer lifespans. Thanks to improved medical care, a person retiring today in their mid-60s may need their savings to last 30 years. The list of less-obvious challenges includes:

Less support from employers. More companies have replaced their pension plans with defined contribution plans – putting added responsibility on the employee. The rise of gig workers and entrepreneurs leaves many without access to an employer-sponsored plan.

Shrinking Social Security. Social Security’s annual cost of living adjustment (COLA) averaged 7.7 percent from 1975 to 1984 – a rate that was higher than inflation. In contrast, COLAs for the last nine years ranged from 0.0 percent to 2.8 percent.1 COLAs are based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which many note doesn’t adequately reflect the growth of some of the more costly expenses seniors encounter, such as health care, property taxes, home repairs, and homeowners insurance.

For example, the Social Security COLA for 2020 was 1.6 percent even though health insurance premiums were expected to go up by 5.6 percent in 2020.2 And Medicare premiums often increase faster than Social Security. As a result, part or all of a year’s COLA may be consumed paying for a retiree’s premium increase.  

Rising health care costs. It’s no secret health care costs have risen drastically in recent years. And the later years in life often account for the highest expenditures. According to the Fidelity Retiree Health Care Cost Estimate, an average retired, 65-year-old couple in 2020 may need $295,000 (after tax) to cover health care expenses in retirement.

Low inflation. While low inflation rates sound positive for individuals on fixed incomes, they also provide low earnings on money in savings and conservative investments like bonds and CDs. Purchasing a fixed annuity or bond (except for a Treasury Inflation Protected Security) while inflation is low may result in losing value if inflation rises. Retirees may need to take on some risk to increase earnings.

Planning for and managing retirement is complicated in every economic environment. Whether your retirement is imminent or in the distant future, give us a call. We’d be happy to help you create a personalized plan designed to meet your needs.

1https://www.ssa.gov/oact/cola/colaseries.html

2https://federalnewsnetwork.com/mike-causey-federal-report/2020/01/retiree-colas-vs-workers-pay-raise-why-the-difference/

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 October 2020. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 3301216.1