Wealth Management Blog

Understanding How the SECURE Act 2.0 Impacts Your Retirement

January 23, 2023

The Consolidated Appropriations Act of 2023, passed by Congress and signed into law by the President, contained several retirement related provisions collectively known as the “SECURE Act 2.0.” The SECURE Act 2.0 is a follow up to the original Setting Every Community Up for Retirement Enhancement (SECURE) Act passed and signed into law in December 2019. Here are some of the key provisions of this new law: Raising the Required Minimum Distribution (RMD) Starting Age The SECURE Act 2.0 pushes back the age at which retirees must begin taking RMDs to age 75. This provision will be phased in over the next ten years, so the starting age for RMDs will be pushed back to age 73 in 2023 and then pushed back again to age 75 in 2033. 1 The original SECURE Act moved the starting age to 72 in 2020 and the SECURE Act 2.0 has no impact on the RMD starting age of retirees who have already begun taking RMDs. Using IRA Distributions for Giving While the age at which RMDs begin will be changing, the SECURE Act 2.0 does not change the age at which Qualified Charitable Distributions (QCDs) can be made. 2 The earliest age at which an individual can make a QCD will still be 70 ½. A QCD is an otherwise taxable distribution from an IRA that is paid directly from the IRA to a qualified charity. Also, the current annual limit of $100,000 for QCDs will be indexed to inflation going forward. 3 Higher Catch-Up Contribution Limits Effective in 2025, workers between the ages 60 and 63 will see the catch-up contribution limits in certain employer retirement plans such as a 401(k) or 403(b) increased to the greater of $10,000 or 150% of the regular catch-up contribution limit. 4 Also, all catch-up contributions limits for all age groups will be indexed to inflation (including the IRA catch-up contribution annual limit which is currently $1,000) starting in 2024. 5 [+] Read More

Gaining a Better Perspective on Recent Market Volatility

June 16, 2022

Global equity and bond markets have experienced heightened volatility over the last several months as elevated inflation readings and the prospect of higher interest rates has made the investment landscape appear treacherous. This increased volatility can certainly be unnerving for investors but it is not necessarily unexpected, especially for a mid-term election year. Since 1980, the S&P 500 has an average intra-year decline of 14%.1 But the equity market drawdowns tend to be more severe in midterm election years, particularly in the months prior to Election Day. Research from Federated Hermes Investors found that “Leading up to Election Day, stocks tend to experience a pronounced pullback – 19% on average – before rallying afterward”2 in midterm years. Historically investors have typically been rewarded for staying the course through the temporary pain of volatility during midterm years. Federated Hermes Investors found that “the S&P on average has risen 32% off the midterm election-year bottom. And it has not declined in the 12 months following a midterm election since 1946.”3 Avoiding the Temptation of Market Timing While it may be tempting for investors to try and time the market by selling investments following a market decline and re-enter the market when things feel safer, investors should note that timing the market with such precision is extraordinarily difficult. JPMorgan highlights the pitfalls of a market timing strategy: “First, there is no guaranteed ‘signal’ to get out of the market, and market bottoms are only determined in hindsight. Second, the investor would need to buy in on the worst days during some of the most significant market drawdowns when loss aversion is at its greatest. As a result, it is hard to believe that someone could be smart enough to consistently miss the worst days while courageous enough to invest for the best days.”4 Moreover, some of the days of best performance occur within weeks or even days of the worst days of performance and those good days are extremely important to recovering losses experienced on the worst days. The chart below from JPMorgan shows the cost of missing out on the best days of performance. [+] Read More

Help Protect Your Savings From Inflation Using I Bonds

June 2, 2022

In 1998 the US Treasury introduced Series I Savings Bonds (“I Bonds”) which are savings bonds for individual investors with interest rates linked to inflation. With inflation rates soaring, investors may be looking for options to help protect their portfolio against the ravages of inflation. Here is a quick primer on one compelling option in the fight against inflation: I Bonds. How do I Bonds Work? I Bonds are bonds issued by the U.S Treasury that earn interest based on a fixed rate and a variable rate that is adjusted twice a year based on changes in the Consumer Price Index for all Urban Consumers (or CPI-U).1 Current inflation is exceptionally high, so any I Bonds issued between now and October 2022 will earn interest at a 9.62% annual rate for six months.2 Interest is compounded semi-annually and added to the principal value of the bond. For example, if you bought $10,000 worth of I Bonds as of the date of this publication, you’d earn 4.81% (9.62% annual rate divided by 2) over the next six months and your I Bonds would then be worth $10,481 after six months. The variable rate component of your I Bonds will then adjust to the new rate that will be announced in October. The variable rate on your I Bonds will also adjust every 6 months after that based on the inflation rate at the time. The bonds will earn interest for the next 30 years or until you cash them out, whichever comes first. You are not permitted to cash out your I Bonds within 1 year of purchasing them. Also, if you cash them out before holding them for 5 years, you will forfeit the last three months of interest.3 How do I Buy I Bonds? I Bonds can only be purchased through the Treasury Direct website. They may not be purchased in or moved to a brokerage account, a 401(k), an Individual Retirement Account (IRA), a Roth IRA, etc. You can’t buy more than $10,000 worth of I Bonds electronically per person in a given calendar year.4 To purchase I Bonds electronically, you’ll need to set up an account on TreasuryDirect.gov and follow the instructions on the site to purchase your I Bonds. [+] Read More

Year End Financial Review and Planning Checklist

December 9, 2021

Before the year ends, take some time to review your financial health. Here are 10 financial planning items to review before 2021 comes to a close. 1. Take your Required Minimum Distribution Required Minimum Distributions (RMDs) were temporarily suspended for 2020 due to COVID-19 relief legislation but RMDs are back for 2021 and beyond. If your 70th birthday is on or after July 1, 2019, you will have to take an RMD from your retirement account prior to December 31st once you reach age 72 in most situations.1 Note that Roth IRAs do not have RMDs. Consult with your financial advisor to determine the exact amount of the RMD that you need to take before December 31st. [+] Read More

Market Turbulence Amid Coronavirus Concerns

February 25, 2020

Global equity markets have experienced a pullback following heightened fears of the spread of coronavirus (COVID-19). This has left some investors wondering what actions they need to take (if any) with their portfolios. History has shown that equity markets typically rebound quickly in the event of a viral epidemic driven sell-off. The pullbacks have historically been short-lived and have typically been followed by a continued upward trend. 1 [+] Read More

Yield Curve Inversion and Recession Threats

August 15, 2019

Concerns over an inverted yield curve combined with the threat of higher tariffs around the globe have created some equity market volatility over the past few weeks. The ups and downs of equity market volatility can certainly be unnerving for investors, but volatility in and of itself is not necessarily a bad thing nor is it necessarily a signal of an upcoming recession. In fact, since 1980 the S&P 500 has suffered an average intra-year decline of 13.9% while the market has had positive returns in 29 of those 39 years.1 [+] Read More

End of Year Market Volatility

December 18, 2018

The recent pullback in global stock markets has caused some concern that the bull market in equities is winding down. There is even some concern that this pullback is among the initial signs of an upcoming recession. To gain some better historical perspective on the recent movement in the stock market, let’s take a look at historical intra-year market declines versus calendar year returns.1 [+] Read More

Mid-Term Election Year Volatility

October 26, 2018

Historically, equity markets have been very volatile in mid-term election years. Since 1962, the S&P 500 has had an average intra-year pullback of 19% in mid-term election years.1 In fact, equity market returns have historically been very tepid before Election Day in early November. In mid-term election years since 1950, the market has returned an average of just 0.96% in the first 10 months of the year, but markets have typically rebounded in the final 2 months of the year, returning an average of 4.24% across November and December. 2 The recent market pullback has wiped out 2018 gains and the S&P 500 is now roughly flat for the year. Again, historically the first 10 months of a mid-term election year are typically flat only to see a relief rally in the final 2 months of the year once the results of the election are known with certainty. Will history repeat itself in 2018? While it is nearly impossible to forecast stock market returns over a specific time frame (particularly for a brief 2-month window), there are reasons to be optimistic going forward: Corporate earnings remain strong3: 81% of the 140 companies in the S&P 500 that have reported third quarter earnings (as of October 23, 2018) posted earnings per share that beat Wall Street expectations, with only 10.7% of companies reporting earnings below expectations. Over the last 25 years, an average of 64% of companies reported earnings that beat Wall Street estimates with 21% of companies missing expectations.4 [+] Read More

BlackRock Checks-In on European Risk & The Week in Review

September 27, 2018

A Check-in on European Risk Fears of a fiscal showdown between Italy’s new government and the European Union (EU) have roiled Italian assets this year – and renewed concerns about EU cohesion. How worried are we? We see a limited risk of near-term flare-ups but are skeptical about the Italian government’s commitment to fiscal discipline and Europe’s ability to cope with the next downturn. We see better risk-return tradeoffs in non-EU assets. Italian assets have taken a hit this year. The selloff was sparked by fears that Italy’s populist government would breach the EU’s key budget deficit limit of 3% of gross domestic product (GDP), as the two major parties in the new governing coalition had vowed to cut taxes and boost welfare spending in their campaign. Italian 10-year government bond yields spiked after the March election, while local stocks fell. See the chart above. Italian assets have recouped some losses recently, only after Rome repeatedly assured it would respect EU rules in its soon-to-be released budget. We see scope for a further recovery in Italian asset prices, but do not see them returning to pre-election levels anytime soon. Why? A number of structural factors are weighing down both Italian and European assets. This helps explain why European stocks have underperformed other global developed markets in 2018. BlackRock's Budget Base Case [+] Read More

Lord Abbett Shares Reminders on October Deadlines for Retirement Planning

September 20, 2018

If you miss or ignore any of these important, applicable dates, you could hurt your retirement finances. As summer comes to an end, don’t forget that October ushers in some critical deadlines—some of which carry penalties. To learn more about these deadlines and the dates to put on your calendar, read on. Also note that while this is not IRA-specific, October 15 is generally the last day to file an individual income tax return that’s on extension. October 1—Simple IRA Establishment This is the last date in which an employer can establish a SIMPLE IRA plan, effective for 2018. Those plans established after October 1 would not be effective until January 1, 2019, at the earliest. Notably, an exception applies for a newly established business. If you’re a new employer that started your business after October 1, you can establish a SIMPLE IRA plan for the plan year by the end of the same calendar year as soon as administratively feasible after your business came into existence. [+] Read More

4 Ways the New Tax Law Can Reduce Your 2018 Taxable Income

September 19, 2018

A recent survey from the American Institute of CPAs found that 63% of individuals who either have $250,000 in investable assets and/or $200,000 in household income were likely to tweak 2018 financial planning strategies as a result of the new tax law. Most of the respondents indicated that ‘tweaking’ their financial plans would be in an effort to reduce taxable income, and the 2018 Tax Cut and Jobs Act offers a few new methods to do just that.¹ Here are four: Lump Your Charitable Contributions Together – in the new tax law, the charitable giving deduction has remained in place for taxpayers who itemize. The thing is, however, that many taxpayers are expected to take the standard deduction in 2018 instead of itemizing, since it has jumped to $12,000 for individuals and $24,000 for married couples. One method to get over the standard deduction, however, would be what many CPAs call “bunching,” or making a few years’ worth of charitable donations in a single year. That way, you could itemize your deductions in one year, and perhaps take the standard deduction the next. [+] Read More

Investing When the Market is at an All-Time High

September 18, 2018

Should You Be Concerned About the Height of the Market? US equity markets have been trading at or near all-time highs recently as the S&P 500 and Nasdaq Composite both reached new highs multiple times in August.1 This news has led some skeptics to believe that a US stock market at a record high level could be a cause for concern. Does reaching an all-time high mean that the market is more likely to decline in the near future? After all, reaching an all-time high means we could be at the peak of the market and we could now be poised for a sell-off. Before we get too caught up in the hype though, let’s take a look back at what market highs have shown historically. Looking at the month-by-month returns of the S&P 500 (including dividends) from 1900 through July 2018, 276 of all months in this time period ended at all-time highs as compared to the monthly close of all previous months.2 Interestingly enough, of these 275 months ending at all-time highs prior to July 2018, 258 of them, or 93.8%, were followed by at least one new month-end all-time high at some point in the next year. 98.2% of all-time highs were followed by at least one new all-time high within the next 5 years and 99.3% of all-time highs were followed by at least one new all-time high within the next 10 years. [+] Read More

How Should You Handle Roth IRA, HSA, and 401k Savings? – Doug’s Quiz Corner

September 14, 2018

Saving for Retirement and Potential Health Care Costs Your friend Jody has recently started a new job and she has several options for saving for her retirement and future health care costs. Jody’s new employer offers a 401(k) with a match of up to 3% of her salary. They also offer a Health Savings Account (HSA) option. Jody lives in a state that does not tax withdrawals from HSAs for qualified medical expenses and contributions to HSAs may be deducted from taxable income for state income tax purposes. In addition, Jody also has a Roth IRA which she is using to save for her retirement. Jody is in very good health and would prefer to have a health plan that limited her upfront health care costs while allowing her to save for future expenses. She is comfortable with a high deductible plan. She is financially secure and doesn’t plan on touching the money in her Roth IRA until retirement. Assume Jody meets the eligibility requirements to participate in her employers 401(k) program, enroll in a Health Saving Account, and simultaneously has enough to contribute to a Roth IRA. [+] Read More

Nuveen Sees Economic Growth Picking Up, Believes It Should Help Stock Prices

September 13, 2018

Trade issues may continue to cause trouble but shouldn’t derail the bull market or end the economic expansion. Investor sentiment was mixed last week. Negatives included concerns about market liquidity, sparked by the rising value of the U.S. dollar and fears of contagion from some emerging markets. Ongoing trade issues also posed a general concern, particularly fears surrounding a potential new round of U.S./Chinese tariffs. On the positive side, investors focused on strong U.S. economic data that pointed to accelerating growth. The negatives won in the end, as the S&P 500 Index fell 1% for the week, after rising during eight of the nine previous trading weeks. Liquidity Concerns Appear Overstated Some investors are growing more concerned about shrinking liquidity as the Federal Reserve raises rates and shrinks its balance sheet, the value of the dollar climbs and select emerging markets such as Turkey and Argentina experience currency crises. Of all of these factors, we are most concerned about the rising dollar. The increase is not overly problematic by itself, but we would be more worried if interest rates were higher and rising more quickly and/or if economic growth were decelerating. On balance, we recognize that market liquidity is growing more constrained and the current economic cycle and equity bull market are in their later stages. But we believe such concerns are overwrought. The global banking system remains healthy and global monetary policy is still relatively easy, which suggests that a liquidity squeeze isn’t in the cards. [+] Read More

Investing Isn’t Always About Retirement Planning

September 5, 2018

When we talk about saving and investing for the future, the conversation usually steers quickly towards retirement planning – IRAs, 401(k)s, pensions, Roth IRAs, and so on. After all, retirement is when all of your careful saving, well-intentioned investing, and hard work pays off. It’s when you’re finally supposed to be able to live the good life. But investing isn’t always about retirement planning. Nor should it be. While it’s true that many people share the same goal of retiring with financial security, there are myriad of other life goals that require careful saving, planning, and investment returns. J.P. Morgan Asset Management created a graphic that effectively illustrates this point: [+] Read More

Should You Invest Your Entire Investment Portfolio in a Single Management Strategy?

September 4, 2018

We’ve all heard the term “don’t put all your eggs in one basket”. Of course, this concept can be easily applied to investing. Many sophisticated investors understand that investing in only one stock, or only one asset class, or only one anything is risky. However, the question of whether or not you should invest in just one money manager is rarely directly addressed. A key objective of diversified investing is to build a portfolio that is spread across multiple asset classes in an effort to lower the overall volatility of the portfolio. If you invest your entire portfolio in one single stock it’s clear that your entire portfolio will be tied to the fortunes, and therefore risk of that one company. Adding additional investments to the portfolio can lower the overall volatility and risk of the portfolio, especially if you are adding additional holdings with low correlations to one another. In other words, if your portfolio zigs, you want to add something that zags to get the most effective diversification benefit. To take this further, if your portfolio is made up entirely of one large cap telecom stock, adding a second and third large cap telecom stock may give you little in the way diversification benefit if each of these companies have similar factors that drive their returns. Ideally, a portfolio will be well diversified among different sectors. That way, if one sector is performing poorly, this poor performance may be offset by other sectors with stronger performance. Likewise, geographical diversification is important to help mitigate the impact of a poorly performing market. [+] Read More

Nuveen Sees Investors Looking Past Risks to Bid Stocks to New Highs

August 30, 2018

We see threats to equities, but we don't believe this bull market is over. Last week featured multiple negative political headlines for President Donald Trump that questioned the stability of his administration. The news was also dominated by signs of increased trade tensions between the U.S. and China, as well as statements from Federal Reserve Chair Jerome Powell that interest rate hikes were likely to continue. Despite the noise, however, investors continued moving money into stocks, causing the current bull market to become the longest in history and the S&P 500 Index to reach new record highs by the end of last week. It is natural to ask what risks will likely cause the bull market to end, as equity prices again reach new highs and the roller coaster action that has dominated markets since February appears to be over (at least for now). Rising protectionism appears to be the biggest theat. From a rational perspective, we think this risk should fade since trade restrictions are ultimately a lose-lose proposition. And the United States appears more willing to negotiate than President Trump’s tough rhetoric would indicate. Trade uncertainty remains a wildcard, but we still believe that an all-out trade war is unlikely. [+] Read More

How to Successfully Roll Over Your 401(k)

August 29, 2018

When a person leaves a job to retire or to join another employer, there are often decisions about what to do with your 401(k). Should you leave it where it is, and just not mess with it? Should you roll it over to your new employer’s plan? Should you roll it into an IRA? Those three questions, in fact, present three distinct options for an investor to potentially choose from. In this post, we’ll examine each option, detail the pros and cons, and in the process, hope to provide you a road map for how to successfully manage your 401(k). After all, there’s no reason for an investor to not do something with their 401(k) because it just seems too hard to move without incurring penalties. Our biggest suggestion though is that – unless it’s absolutely necessary – you resist the temptation to cash out. Cashing out of a 401(k) and taking it as a distribution means potentially incurring a sizable tax burden, and if you are under the age of 59 ½ your distribution will also be subject to an early distribution penalty of 10% unless an exemption (such as medical costs) exists. [+] Read More

Lord Abbett Dives Into the Roth Recharacterization Repeal in the New Tax Act

August 23, 2018

Recharacterization of Roth IRA conversions from traditional IRAs and 401(k)s has been repealed, but recharacterizing Roth contributions is still permitted. When Congress passed the Tax Reform Act of 1997, what was originally referred to as “IRA Plus” became known as Roth IRA after its primary sponsor, Senator William Roth (Del.). Two decades later, Roth IRAs continue to grow in popularity and assets, especially with younger investors. More than 30% of Roth IRA investors are younger than 40, while cumulative assets have grown to more than $660 billion as of December 31, 2016 (latest available), according to the Investment Company Institute. [+] Read More

Financial Best Practices for New Parents

August 22, 2018

Having a baby (or babies!) and starting a family means so many exciting, happy, but also unknown things. For first time parents, in particular, it means navigating the often head-spinning tasks of feeding, caring for, and cleaning a baby while also working, taking care of the house, and if you’re lucky, sleeping. For most new parents, there’s not enough time in any day to get everything done, and by the end of every day you’re exhausted. Making time for budgeting, financial planning, and taking steps to prepare for the child’s future can often seem so far out of reach. But at the end of the day, it must be done. A recent study found that in the first year alone, the cost of raising a baby can run upward of $21,000 – and that’s not even factoring-in any unexpected illnesses or conditions an infant might have early-on, which are quite common. From the time the baby is born until he or she turns 18, the total cost of upbringing can range from $260,000 (“no-frills”) to $745,000.¹ In short, it’s no financial walk in the park. [+] Read More

Should Investors Stress Over an Inverted Yield Curve?

August 21, 2018

Despite Apple topping $1 trillion in market value, the unemployment rate continuing to climb down, and a multitude of other positive market indicators, the Treasury yield curve has begun worrying some market analysts. That said, we don’t feel that investors should worry too much about an inverted yield curve. Here’s why… The Treasury Yield Curve as an Indicator of Recession The Treasury yield curve is typically upward sloping where long-term yields are higher than short-term yields. The longer the time to maturity, the higher the risk to the bondholder since the longer-term bonds have a longer time horizon and are therefore exposed to more potential changes in interest rates than short-term bonds. This forces investors in long term bonds to seek higher yields in exchange for accepting the added risk of a longer maturity bond. What is the Treasury yield curve? The U.S. Treasury Yield Curve compares the yields of short-term Treasury bills (those with terms of less than a year) with long-term Treasure notes and bonds (notes have terms of two, three, five, and 10 years while bonds have terms of 20 or 30 years). Yields always move in the opposite direction of Treasury bond prices because low demand drives the price below the face value while high demand drives the price above face value. The yield curve becomes inverted when short-term yields are higher than long-term yields. An inverted yield curve does not happen very often, but it has preceded every recession in the U.S. for the last 50 years.1 What Causes an Inverted Yield Curve? [+] Read More

Evaluating the Most Efficient Way to Save for a College Education – Doug’s Quiz Corner

August 17, 2018

What Are the Advantages of Using a Roth IRA vs. traditional IRA vs. a 529 Plan When Saving for College Costs? Consider this Scenario: Your friends Dan and Ashley have a son who will start college in 7 years. They would like to save some money for his college fund, but they are unsure about the best way to do so. Right now they have $10,000 in cash set aside for this purpose. Over the next few years, they’d like to continue saving more money for his college education. To make the most of what they’ve already saved, they’re considering putting the $10,000 into a 529 plan, into a traditional IRA ($5,000 into Dan’s and $5,000 into Ashley’s), into a Roth IRA ($5,000 into Dan’s and $5,000 into Ashley’s) or doing some combination of these options. Assume that Dan and Ashley will receive a full state tax deduction on a $10,000 contribution into a 529 plan. Also assume that they meet eligibility requirements to contribute $5,000 each into their traditional IRAs and/or Roth IRAs. [+] Read More

JP Morgan Releases New Guide to the Markets for 3Q 2018

August 16, 2018

Reviewing the Guide to the Markets to Understand the Current Investment Environment J.P. Morgan's Guide to the Markets for the third quarter of 2018 is now available for your review. Inside you'll find deeper insight into the current investment environment and what the investment team at JP Morgan is keeping an eye on right now. On page 19 you'll see two charts (Real GDP & Components of GDP) that show how the economic expansion is continuing at a slow but steady pace. On page 25 you'll see a chart that displays how unemployment continues to fall, which JP Morgan believes should drive up wages. And on page 7 you'll see three charts that show how although earnings headwinds should be behind us, future growth may be muted. [+] Read More

It’s a Family Affair: Talking to Your Family about Financial Planning

August 15, 2018

The “Godfather of Soul,” James Brown, had a noble vision for how he wanted his assets distributed after his passing. His will had set aside $2 million for his grandchildren’s education, and he would also set aside millions of dollars for the education of underprivileged children in Georgia and South Carolina. Eleven years after his passing, not a penny has gone to these beneficiaries of his will. The reason: ongoing legal battles, as family members challenge Mr. Brown’s will in court and multiple parties argue over the assets in his estate. More than a dozen lawsuits have been filed since Mr. Brown passed away in 2006, and one of them involves nine of Mr. Brown’s children and grandchildren suing the estate’s administrator as well as Mr. Brown’s widow, Tommie Rae Hynie.[1] James Brown carefully crafted his estate plan to focus on education and his community, yet his wishes are arguably yet to be fulfilled. It leaves one to wonder: what if Mr. Brown had gathered his entire family together, had very frank and candid discussions about his estate plan, and told his family explicitly that they were not to challenge his wishes. Where would his estate be today? [+] Read More

Dorsey Wright Releases Manager Insights for Q2 2018 Review

August 9, 2018

U.S. equities continued to rise during the second quarter. Both large cap stocks (S&P 500) and small cap stocks (Russell 2000) finished the quarter in positive territory. The same can’t be said for International stocks though. There have been quite a few head winds for international equities, and that caused both developed and emerging markets stocks to perform poorly this quarter. Heading in to the start of the year, the U.S. Dollar was in an established downtrend and that was really helping push international equity prices higher. That changed in late April, and the U.S. Dollar spent May and June in a strong rally that really had a negative impact on foreign equities. Both developed markets (EAFE) and emerging markets finished down for the quarter. We are also seeing a big rotation our of Latin America, which is one of the areas that was such a strong performer last year. While this is unfolding you should expect the character of our international holdings to change and be reallocated in areas that are holding up better. A declining U.S. Dollar isn’t a prerequisite for international stocks to do well, but when there is a sharp reversal like we saw this quarter it takes everyone time to adapt to the changes. [+] Read More

The Investment Benefit of Women-Led Businesses

August 8, 2018

A recent study of 22,000 publicly traded companies found a correlation between profitability and women in leadership roles. Specifically, when companies increased leadership positions for women from 0% to 30%, profitability increased by 15%. In the private technology sector, it was found that women-led companies were not only more efficient, but also brought in a 35% higher return on investment.[1] But statistics also show that the business world has yet to fully bridge the benefits of women in leadership roles with actual participation and investment. Recent data showed that less than 2% of all venture capital goes to female founders and fewer than 8% of investors are women. And even though American, women-owned businesses represent 28% of American enterprises – while employing 7.7 million people[1] – in the publicly-traded sphere women only hold 5% of CEO positions at S&P 500 companies.[2] [+] Read More

Nuveen Reports Fundamentals Helping Stock Prices Push Higher

August 2, 2018

U.S. Indices Are Mixed, While Corporate Earnings Draw Headlines Investors focused last week on a moderate easing of trade tensions and a solid second quarter gross domestic product report. Corporate earnings also drew headlines, particularly troubled results that ravaged Facebook’s stock price. U.S. indices were mixed, although the S&P 500 Index posted a fourth weekly gain, rising 0.6%. The energy, industrials and financial sectors were the best-performing areas, while technology and consumer discretionary came under pressure. Highlights Strong economic growth and stellar corporate earnings continue to provide reasons for investors to bid stock prices higher. Trade tensions eased a bit last week, but uncertainty over policy is keeping financial markets in check. We expect the equity market to maintain its current trading range until trade tensions ease. [+] Read More

Writing Your Will – Ensuring Your Wishes are Known and Followed

August 1, 2018

Our estate planning hats are on this week, and we have two fundamental but essential questions for readers: (1) Do you have a will? and (2) If you do, have you updated it in the last year? If the answer to either of those questions is no, we have five reasons it should be yes: Don’t Let State Laws Determine Who Gets Your Assets – when a person passes, and it is determined that he/she did not have a written will, then state laws will usually determine how the person’s property will be distributed. Though the state will generally opt to distribute property amongst family and close relatives, the fact that the state is making the decisions is problem enough. You work hard for the assets you accumulate over a lifetime. It should be up to you how those assets are distributed. [+] Read More

BlackRock Reports on China's Currency, Domestic GDP Data, and the Fed's View of the Economy

July 26, 2018

Should China's Currency Worry Markets? A slide in the Chinese yuan is sparking fears of a sharper devaluation that could rattle global markets. Are the worries justified? We see the yuan depreciating moderately in response to slower growth, financial deleveraging and escalating trade tensions. We expect China to rely mostly on fiscal and monetary tools, rather than the currency, to manage any growth slowdown in the second half. The Chinese currency posted its biggest monthly fall against the U.S. dollar on record in June - just as the trade tussle between China and the U.S. heated up. The yuan has slid 4% so far this year, with the fall accelerating since mid-June when U.S. President Donald Trump announced a 25% tariff on $50 billion of Chinese imports. See the blue line in the chart above. We do not see China resorting to a 2015-style devaluation to cushion the blow. Back then, a lack of market confidence in China’s policy framework contributed to capital flight (see the green bars), spooking global markets. Today, China has stricter capital controls in place – and improved coordination between policymakers. We believe this should give the government confidence to allow the yuan to gradually slide lower. [+] Read More

4 Healthy Financial Habits Everyone Should Have

July 25, 2018

Oftentimes when it comes to investing, there are habits/tasks we know we should do, and habits/tasks that we’d maybe prefer to do. Saving 20% of every paycheck and keeping cool during volatile markets are examples of things we should do. Splurging on a trip to Europe and selling stocks to “wait out” the downside volatility might be examples of things we’d prefer to do. For many savers and investors, there is a constant tension between these two, even though we know that the clearest path to long-term success is saving more, spending less, and investing prudently. Much like losing weight, the formula for success is fundamentally simple – but the execution and follow-through can be painstakingly hard. The fundamental question, then, is: what can we do to shift our behavior? What can we do to form better, lasting habits that lead to long-term financial success? [+] Read More

Is it Better to Save for Retirement or Pay Off Student Loans? – Doug’s Quiz Corner

July 20, 2018

Determining Priorities When Saving for Retirement and Paying Off Student Debt Consider this Scenario: Your friend Stanley has recently completed college and has just started a new job. Stanley has $40,000 in student loans to pay off at an interest rate of 7%. Stanley’s starting salary at his new job is $50,000 per year. Additionally, his employer offers a 401(k) match of 2% of salary. Stanley understands the importance of saving for retirement and would like to save as much as possible toward his future. Stanley also understands that he is $40,000 in debt and he would like to pay off his student loans as quickly as possible. He isn’t certain how he should prioritize his budget though, and he’s heard a lot of conflicting advice. When he asks you, what would you recommend: Should he focus on paying off his student debt before investing for his retirement? Or should he save as much as he can toward retirement before paying off his student loan debt? What is the probably the best way to prioritize investing versus paying off student loan debt? [+] Read More

Main Management's Q2 2018 Market Recap

July 19, 2018

Volatility Softening; Rate Hikes The second quarter of 2018 saw a marked decline in volatility from the first quarter. The prevailing feeling in the US equity markets was decidedly more positive. On the whole, the economic picture in the United States improved from the first quarter. Inflation is nearing the Fed’s target of 2% for the Core Personal Consumption Expenditures reading. The manufacturing PMI readings in the U.S. show that the sector continues to expand. The labor market also remains very tight but wage growth remains below 3%. The unemployment rate fell to 3.8% in May, the lowest level in 18 years and the non-farm payrolls have averaged a gain of 207,000 jobs so far this year. On the back of this strong data, estimates for second quarter GDP range from 3-5%, up strongly from the 2.2% estimated for the first quarter. The data is indicating that first quarter was likely more of an anomaly than a trend. The Federal Open Market Committee raised rates for a 7th time in June and conveyed a more hawkish view which indicates that 2 more rate hikes are likely in store for the rest of 2018. [+] Read More

Understanding the Basics of ESG Investing

July 18, 2018

For readers who are unfamiliar with – and maybe curious about – the concept of ESG (Environmental, Social, and Governance) investing, look no further. In this post, we’ll answer basic questions about what ESG investing is, how it came about, the pros and cons, and why it may or may not be right for you. [+] Read More

J.P. Morgan Shares Market Insights for Q3 2018

July 12, 2018

J.P. Morgan Releases the 3Q 2018 Guide to the Markets JP Morgan's Guide to the Markets for the third quarter of 2018 is now available for review. Comprised of 64 in-depth pages of charts that examine a variety of financial and economic topics, the guide illustrates: Sources of earnings per share growth Economic growth and the composition of GDP Fixed income yields and returns Global economic and earnings growth Global commercial real estate, and Local investing and global opportunities [+] Read More

How Jobs and Financial Markets Intersect

July 11, 2018

How important are jobs and the unemployment numbers to financial markets? So important that strict rules were put in place over 30 years ago in an effort to prevent the numbers from being prematurely released to the public. Generally speaking, the only people with access to the numbers – before their official release – are the staff of the agency issuing the data, and the President of the United States and his executive team. Since the jobs numbers are considered “market-moving data,” it makes sense that the data should be treated, in a sense, like insider information. Here’s how it works: The Bureau of Labor Statistics (BLS) releases its monthly employment report on the first Friday of the month, at 8:30 AM. But the night before, the president and several senior administration officials — including the Treasury secretary and the chairman of the Council of Economic Advisers — are briefed on the numbers. By rule, no one can discuss the numbers at all before the official release at 8:30 AM. In fact, the data is considered so sensitive that staffers are supposed to wait until a full hour after the release to make any public comments about it. [+] Read More

Performance Reporting: Does It Really Matter?

July 10, 2018

When you’re validating a money manager recommendation, chances are high that you’re looking for information regarding the managers performance against its own benchmark over time. While it’s up to the manager to provide this information to a third-party reporting database, many managers elect to do so, in part because it helps with transparency of their product and allows users to review the fundamentals of their strategy and to compare results alongside the appropriate chosen benchmark. Of the money managers that choose to report their performance, they typically report the investment performance of their products to institutional databases such as Morningstar, eVestment, and Informa Investment Solutions, among others. Subscribers to these databases can then compare the reported performance of thousands of different investment products and use custom filters and searches to narrow down a potential search for a product that best fits what they are looking for. By comparing managers who report to a database like this, a researcher may be able to whittle a universe of hundreds or even thousands of products down to just a handful of strategies that meet the investor’s specific criteria. But what if an investment manager doesn’t report the performance of their products to a database? [+] Read More

Lord Abbett Wants to Make Sure You Don't Overlook These Retirement Planning Milestones

July 5, 2018

Planning for Retirement? Don't Overlook These Milestones With millions of Americans owning tax-advantaged retirement accounts, totaling $28 trillion in assets, in many types of accounts—such as a 401(k), 403(b), 457, and an IRA (Roth, traditional, SIMPLE, SEP, SAR SEP, rollover, inherited, etc.), each with their own rules—it’s little surprise that slip-ups and or oversights occur all too frequently. Misunderstanding or outright ignoring a number of key dates, for example, can be costly—in terms of financial penalties and/or lawyers and accountant fees, not to mention considerable time to amend the errors. [+] Read More

The Shaky State of Social Security

July 4, 2018

If there’s a good word to describe the state of Social Security in America, it might be something like “uncertain.” And that’s a far cry from the reliable, dependable safety net that many retirees and future retirees have come to expect of the program. Many readers probably know where this is going – the familiar narrative that Social Security is underfunded, may run out of money soon, and may not be there for future generations. Even still, as the checks continue rolling in, the idea that Social Security is in trouble has a feeling of being far-fetched. For many, it feels like an issue that may indeed be true but doesn’t necessarily apply to you specifically. First signed into effect by President Roosevelt on August 14, 1935, the Social Security Act created a social insurance program designed to pay retired workers over the age of 65 continuing income after retirement. Since then, tens of millions of people have received benefits through the Social Security Act. Yet, the program was wrought with challenges from the start, and experienced financial peril as early as 1977.¹ And, despite attempts to keep it solvent, the Social Security program faces a major long-term shortfall. Surprisingly though, a large number of Americans seem unaware of this looming failure. [+] Read More

BlackRock Says Investors Should Prepare for Trade Wars, Not Panic

June 28, 2018

Trade Wars: Don't Panic, Prepare Trade tensions are here to stay. Even without a full-blown trade war, escalating frictions could weigh on business confidence – and growth. Economic fundamentals are still running strong and underpinning our risk-on view in the short term, but we advocate building increased resilience into portfolios as macro uncertainty rises. Economic tensions between China and the U.S. have shot up, confirmed by our BlackRock Geopolitical Risk Indicator. This has coincided with an out performance of quality stocks, as the chart shows. Investors appear to be heeding risks, trade included. Trade risks are not limited to China. The prospects of a North American Free Trade Agreement (NAFTA) deal have deteriorated. The European Union (EU) and others have retaliated against U.S. steel and aluminum tariffs, while the U.S. has threatened to impose tariffs on cars imported from the EU. [+] Read More

Do You Live in One of the Wealthiest Parts of the Country?

June 27, 2018

For nearly 20 years WrapManager has been headquartered in the San Francisco Bay Area, which is notoriously (based on hard data) one of the most expensive areas in the world. And while we are a nation-wide investment manager, it comes as little surprise (to us at least) that 21 of the 100 wealthiest cities in the US are in California, with most them in the San Francisco Bay Area. This fun fact may have some readers now wondering what the 100 wealthiest cities/communities are, and whether you might live in one of them! (It left us quite curious.) Well, thanks to a Bloomberg analysis of 2016 US Census data, now you can find out. [+] Read More

Nuveen Sees Investors Looking Past Geopolitics, But Trade Remains a Wildcard

June 21, 2018

While Last Week Was Very Eventful, Investors Shrugged Off Most of the Developments That Drove Headlines President Trump’s comments at the G7 meeting the previous weekend generated a lot of criticism, but investors mostly ignored any possible implications. Similarly, the U.S./North Korea summit appeared to open the way for further dialogue, but did not move the markets. Likewise, the Federal Reserve’s interest rate increase last week had already been baked into market expectations. Stock prices did decline on Friday in reaction to the U.S. announcing it would impose tariffs on Chinese goods, but equity markets were mostly flat to mixed for the week as a whole. Highlights Investors mostly ignored the U.S./North Korea summit and last week’s Fed meeting. But rising trade risks are weighing on sentiment. U.S. growth is accelerating, as is inflation. This should prompt the Fed to continue increasing rates. We see several possible risks to stocks, but believe equities should continue to outperform bonds over the next year. [+] Read More

What History Tells Us about Tariffs and the Threat of Trade War

June 20, 2018

The Tariff Act of 1930, otherwise known as the Smoot-Hawley Tariff, was signed into law by President Herbert Hoover…even as nearly 1,000 economists warned of its dire consequences. The law slapped nearly 900 American duties on imported goods and was done in an effort to boost domestic spending and to protect American companies. Sound familiar? While virtuous in its design, the outcome of the Smoot-Hawley tariffs was far from virtuous. Instead of protecting the US economy, the tariffs arguably helped fuel the Great Depression. Back in 1930, European countries responded to the Smoot-Hawley tariffs by retaliating with tariffs of their own, creating an all-out trade war that produced no clear winners. The Great Depression left no part of the US economy unscathed. Fast forward to 2018, and we find ourselves in a situation somewhat similar to the one we saw in 1930, with the US threatening – or outright imposing – tariffs on some of our biggest trading partners, in an effort to protect American companies. There is little doubt amongst economists that China does, indeed, have unfair advantages and strict requirements for American companies doing business there. Change is arguably needed. The question is, will we have to endure a trade war to get it? [+] Read More

Introducing the WrapManager SAIRSHA Global All Cap ESG Portfolio

June 19, 2018

Some investors wish to align their personal values with their investment portfolio, but there have traditionally been several stumbling blocks for investors looking to assemble a diversified ESG (Environmental, Social, and Governance) portfolio. Fortunately, WrapManager now offers an innovative ESG investment solution which seeks to provide diversification among asset classes, market capitalization, country of domicile, and ESG methodology. What are ESG criteria? Environmental, Social, and Governance (ESG) criteria is a set of standards for company’s operations that socially conscious investors can use to screen investments. Environmental criteria look at how a company performs as a steward of the natural environment. Social criteria examine how a company manages relationships with its employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. [+] Read More

How Does a Stock Split Impact the Cost Basis of Shares? – Doug’s Quiz Corner

June 15, 2018

Understanding the Cost Basis Impact of Stock Splits & Reverse Stock Splits Consider this Scenario Your friend Bill owns a stock that just went through a 2-for-1 stock split and another stock that had a 3-for-4 reverse stock split. He is unsure how these actions will impact his cost basis per share for these stocks. Stock Split: A stock split is a corporate action that takes places when a company divides its existing shares into multiples shares to boost the shares liquidity. Although the number of shares outstanding increases by a specific multiple (such as 2-for-1 or 3-for-1) the total value of the shares held by a shareholder does not change. So, if you held 3 shares and the company held a 2-for-1 stock split you would now hold 6 shares, but the total original value would not change. Reverse Stock Split: A reverse stock split is a corporate action that happens when a company reduces the total number of its outstanding shares. A reverse stock split decreases the number of a company’s outstanding shares by a specific multiple (such as 1-for-5 or 1-for-10) and simultaneously increases the price per share. These are also known as a stock consolidation or share rollback. So, if you held 5 shares valued at $20 each and the company held a 1-for-5 reverse stock split, you would now hold 1 share valued at $100. A company may have their stock go through a stock split in order to make the stock seem more affordable to smaller investors. A company may have their stock go through a reverse split in order to meet the minimum share price for inclusion on a particular stock exchange. [+] Read More

Lord Abbett Shares More Tips on Trusts for IRA and 401(k) Holders - Part 2 of 2

June 14, 2018

Here’s the nitty-gritty on naming a trust beneficiary, plus insights on trust mechanics and taxation, and why bequeathing a Roth IRA appeals to many investors. Owners of a 401(k) plan or IRA account, depending on their estate and legacy-planning goals, have the option to name a trust as a beneficiary instead of an individual (e.g., spouse, child, grandchild, etc.). In last week’s column, I covered the strict, complicated, and cumbersome IRS rules to be followed so that the oldest trust beneficiary can use his/her own life expectancy to determine post-death payouts, including the requirement that the trust qualify as a “look-through.” So long as the trust qualifies, the “stretch” technique (whereby payments can be “stretched” out over a period of time) can be utilized. Instead, assuming the trust qualifies as a “look-through,” you must use the life expectancy of the oldest trust beneficiary for required minimum distributions (RMDs). For this reason, anyone naming multiple trust beneficiaries ideally should see that they are close in age. Further, if any of the trust beneficiaries is not an individual (e.g., estate, charity), there would be no designated beneficiary for distribution purposes, even if the trust qualifies as a look-through; thus, trust beneficiaries would not be able to stretch post-death RMDs over the life expectancy of the oldest beneficiary. If the trust fails to qualify as a look-through, then it has no life expectancy. Generally, the entire account must be distributed to the trust within five years. [+] Read More

Stronger or Weaker Dollar – Which is Better?

June 13, 2018

The dollar debate between investors, economists, and politicians has been rolling on for years. Is a stronger dollar or a weaker dollar better for the US economy and the stock market? Doing research on this question will turn up views from every corner of opinion with no definitive answer. The reality: the dollar debate is complicated, and it depends on who you ask. Opinions within the current administration even appear to be somewhat split on the issue. Treasury Secretary Steve Mnuchin said in January that dollar weakness was “not a concern,” and President Trump has hinted in the past that he prefers a weak dollar. These views appear to differ from Larry Kudlow’s, who now heads the National Economic Council. Kudlow stated recently on CNBC’s “Closing Bell” that “a great country needs a strong currency” and that he favored a strong and steady dollar. So, which is it? [+] Read More

Lord Abbett Talks About Designating a Trust as an IRA Beneficiary - Part 1 of 2

June 7, 2018

Such a strategy can be beneficial, but be sure to consult an experienced attorney and tax professional to navigate the maze of rules. In the first of a two-part series, money manager Lord Abbett tackles some of the complexities of designating a trust as an IRA beneficiary. Increasingly, clients are relying on their advisors for advanced beneficiary-planning strategies, such as naming a trust as the beneficiary of a retirement account. Designating a "look-through" trust as an IRA beneficiary can be tricky and complicated, with potentially serious tax consequences if done incorrectly. Advisors and their clients need to be aware of the nuances and appropriateness of these arrangements. Typically, qualified retirement plans and IRAs are not subject to probate. Instead, retirement assets are distributed according to account owners’ current beneficiary designation. Naming rules are very liberal, thus offering IRA owners a number of options in designating a beneficiary; in fact, any individual and/or non-individual (charity, estate, or trust) can be a named beneficiary. But if IRA assets are moved into the trust, either while the account owner is alive or at death, a distribution subject to income tax has occurred. Tip: Never move IRA assets into the trust. Doing so will result in a taxable event on the entire IRA balance. Instead, name a trust as beneficiary on the IRA beneficiary form. Why would the owner of an IRA want or need to name a trust, rather than a person, as his or her beneficiary? [+] Read More

It’s the 2nd Longest Economic Expansion in U.S. History – How Long Can It Last?

June 6, 2018

Through April of this year, this economic expansion is now 106 months old. If the US economy continues to grow through May – which seems all but assured – it would make this economic expansion the second longest in US history. Looking out even further, if the economy continues to grow through July 2019, it would become the longest period of growth in the history of the country. There’s a real chance it could happen – in a recent poll of global fund managers by Bank of America Merrill Lynch, only 13% of them thought a recession was likely in the near term. Using Corporate America (earnings) as in indicator, the numbers also support the case for more growth: in Q1 2018, the blended earnings growth rate for S&P 500 companies is 24.5% as of this writing, which would mark the highest earnings growth rate the economy has seen in nearly eight years. [+] Read More

Introducing the MILES Bond Portfolio

June 5, 2018

Investing on your own in fixed income markets can be extremely challenging. Unlike the stock market where equities trade thousands of times throughout the day on a public exchange, the bond market is notoriously difficult to navigate because trades are not placed on an exchange, they are instead placed over the counter and even the most liquid bonds available may only change hands a few times per day. Even if an investor is able gain a grasp on the fair value of a particular bond, building out a diversified portfolio of bonds is an entirely different challenge given that the minimum investment for one particular bond could be $10,000 (or more). And even if you think you’ve found the perfect bonds for you it can be challenging and time consuming to find sellers willing to sell those bonds to you at your preferred price. Investing in Fixed Income via Mutual Funds and ETFs Investing in fixed income through a mutual fund or traditional ETF solves many of these problems. Rather than purchasing an individual bond, a mutual fund or ETF buyer is purchasing a basket of bonds. By making one purchase they gain exposure to hundreds or even thousands of bonds. [+] Read More

Nuveen Sees Equities Treading Water, Although Fundamentals Look Solid

May 31, 2018

Equities Prices Are Likely to Continue Churning, But Should Eventually Move Higher Equity markets struggled to gain clear direction last week. Investors focused on geopolitical issues, particularly U.S./China trade negotiations and the on-again-off-again prospects for a summit with North Korea. Other issues included the sustainability of the U.S. and global economic expansions, rising bond yields, the spike in oil prices and Federal Reserve policy. The S&P 500 Index rose 0.3% for the week. Income-oriented sectors, technology and consumer discretionary led the way, while energy and materials were laggards. Treasury markets also gained ground as the 10-year Treasury yield fell back below 3%. [+] Read More

Avoiding Slow Failure in Retirement Planning

May 30, 2018

Editor’s Note: This article was written for the WrapManager Wealth Management blog by guest author Justin Sibears, a Portfolio Manager at Newfound Research. More information about Justin and Newfound can be found at the bottom of the article. Slow failure in investing happens when portfolio returns are insufficient to generate the growth needed to meet your objectives. No one event causes this type of failure. Rather, it slowly builds over time. Think death by a thousand papercuts or your home slowly being destroyed from the inside by termites. Traditionally, this type of slow failure was probably the result of taking too little risk. Oversized allocations to cash, which as an asset class has barely kept up with inflation over the last 90 years, are particularly likely to be a culprit in this respect. [+] Read More

J.P. Morgan Shares Global Equity Views for 2Q 2018

May 24, 2018

Taking Stock of Trends, Opportunities, and Risks At first glance, the current environment remains rather favorable for equity investors. Profitability is strong and continues to rise around the world, interest rates are still very low in most countries and valuations don’t yet look excessive, for the most part. But after an exceptionally positive 2017 and a rip-roaring start to 2018, investors have become more nervous, fearing that a breakdown in international trade relations or a monetary policy mistake could bring this economic cycle to an end. Volatility has returned to markets, with investors more inclined to punish perceived disappointments rather than celebrate successes. [+] Read More

Are Stocks Attractively Valued?

May 22, 2018

Over the past couple of years, the S&P 500 Forward P/E ratio has been above its 25-year average. This has led some market commentators to warn that equities aren’t attractively valued. A Price to Earnings (P/E) ratio is a valuation measure that shows how much investors are willing to pay for a dollar of a company’s earnings. For example, a company that has a stock price of $30 and earnings per share of $2 would have a P/E ratio of 15 ($30/$2 = 15). A reading above the long-term average is typically interpreted to mean that stocks are expensive relative to the historical average. Similarly, a reading below the long-term average is typically interpreted to mean that stocks are cheap relative to the historical average. The recent pullback in equities to start the year coupled with continued strong earnings growth has left the S&P 500 Forward P/E ratio at 16.1x at the end of April 2018. The 25-year average S&P 500 Forward P/E ratio is exactly 16.1x. This marks the first time in over 2 years that this reading has not been above the 25-year average. [+] Read More

How Does Exchange-Rate Risk Impact the Purchase and Coupon Payments of Foreign Bonds? – Doug’s Quiz Corner

May 18, 2018

Tackling Currency Risk When Purchasing Foreign Bonds Consider this Scenario Your friend Lucy is a US resident who bought a British bond at par with a £10,000 value at maturity. The bond was exactly one year from maturity at the time she purchased it and it pays a 2% semi-annual coupon. There are two coupon payments remaining including the payment at maturity. [+] Read More

BlackRock Weekly Commentary Asks Is This As Good As It Gets?

May 17, 2018

An Unusual Earnings Season With many developed market firms having reported first-quarter results, we can say without doubt it’s been an unusual earnings season. Strong beats were met with little investor cheer. The worry: Earnings are close to a peak. Yet we see more room for earnings to climb this year and next, and reaffirm our overweight to U.S. equities. [+] Read More

Legacy Planning with Donor Advised Funds

May 16, 2018

If part of your legacy and estate planning involves giving to charity, you may want to consider Donor Advised Funds (DAF). DAFs are not generally telegraphed as a solution for investors with charitable inclinations, but perhaps they should be – DAFs offer a unique approach to giving assets, potentially growing your assets, and then donating them to the charity (or charities) of your choosing – all in a tax efficient manner. So What Are Donor Advised Funds Exactly? The IRS defines them as a fund or account operated by a charitable, 501(c)(3) organization, which is known as a “sponsoring organization.” Once a Donor Advised Fund is established at a sponsoring organization, contributions are made to the account by individual donors. These contributions can range from anything to cash, or mutual funds, or commercial or residential real estate, to life insurance policies and more. Once the donor makes the contribution, the sponsoring organization has legal control over it, but the donor is generally entitled to an immediate tax deduction associated with the charitable contributions and would also maintain control over the investment management and distribution of funds from the account. [+] Read More

Nuveen Feels Reasons for Optimism Outweigh Reasons for Caution

May 10, 2018

Reasons for Optimism Slightly Outweigh Reasons for Caution Corporate earnings were in focus for much of last week. Results continued to come in stronger than expected and earnings are on track for their best quarter since 2010. But concerns remain that earnings growth may have peaked in the current cycle. Investors also focused on economic data, including another drop in U.S. unemployment and indications that global growth momentum may be slowing. Amid these crosscurrents, stocks were mixed, with the S&P 500 Index dropping 0.2% for the week. Technology was a standout performer, while telecommunications and healthcare lagged. Upside and Downside Risks May Result in Ongoing Volatility We do not believe that we are close to the end of the current cycle of global economic expansion, but the endgame may develop more quickly than many investors expect. At this point, it appears that upside and downside risks for the economy and financial markets may be pretty well balanced. [+] Read More

Don’t Confuse 401(k) Withdrawals with 401(k) Rollovers – It Could Cost You

May 9, 2018

One of the reasons investing gets confusing for most people is that there are too many rules, requirements, products/options, and terms. The website “Investopedia” claims to have a “comprehensive financial dictionary with over 13,000 terms and counting.” Insanity! The world of retirement planning – which is just a subset of investing – is not much better. But the definitions do matter. A 401(k) withdrawal, for example, could mean paying penalties and taxes that could cost you dearly if done wrong, or done at the wrong time. A 401(k) rollover, on the other hand, could provide you with several benefits and advantages for moving your retirement plan in the right direction. In this case, a single word makes all the difference – and not knowing it could cost you. [+] Read More

Should You Still Own REITs in a Rising Interest Rate Environment?

May 8, 2018

When interest rates spiked in early 2018, income related investments such as Real Estate Investment Trusts (REITs) experienced a sell off. The FTSE NAREIT Equity REIT Index returned a negative 8.2% in the first quarter of 2018.¹ Income producing investments will frequently experience a sell-off in the face of a sudden spike in interest rates. Does this mean that you should not own REITS when interest rates increase? [+] Read More

Lord Abbett Weighs in on Appreciating Net Unrealized Appreciation

May 3, 2018

Net unrealized appreciation allows for favorable tax treatment of withdrawals of an employer's stock - but understanding the rules is crucial. Of all the various ways to reduce one’s taxes in retirement, net unrealized appreciation (NUA) is often misunderstood or overlooked altogether. The rules may be complicated, but a plan participant who owns company stock and is separating from service or retiring should be aware of NUA before rolling his/her retirement account into an IRA or a new employer’s plan. Net unrealized appreciation of employer stock held in an employer-sponsored retirement plan permits gains that occurred inside the plan to be taxed outside the plan (e.g., brokerage account) at preferential long-term capital gains rates. [+] Read More

The Quick and Easy Guide to Roth IRAs

May 2, 2018

With Tax Day just behind us, it seems like a good opportunity to focus on the type of retirement income the IRS almost never meddles with: tax-exempt income! Tax-exempt income is any income that is not subject to federal, state, and/or local income. In this case, income sources that are considered to have been previously taxed and therefore, not subject to further taxation. So, here’s your “what you need to know” guide for Roth IRAs. What is a Roth IRA? A Roth IRA is a retirement account that has three essential features: The owner’s contributions are not tax-deductible; BUT, the assets in the account grow tax free over time; AND, the distributions taken from the account, generally speaking, are also tax-free once the owner reaches retirement age. [+] Read More

A Comparison of Perspectives: Nuveen & BlackRock Share Weekly Investing Outlooks

April 26, 2018

As market volatility continues to be a focus point for investors, money managers are keeping a close eye on key market indicators. This week we share the market commentaries presented by Robert C. Doll, CFA, the Senior Portfolio Manager and Chief Equity Strategist at Nuveen Asset Management, and Richard Turnill, the Global Chief Investment Strategist at BlackRock. While their analyses highlight many of the same economic and market factors, their interpretations have distinct flavors. Doll feels that while the “equity markets have been buffeted by a number of credible threats so far in 2018,” it “shouldn’t be enough to actually cause a bear market,” yet, “these risks will need to ease before stocks can regain their footing.” Interestingly, Turnill feels that “the market environment in 2018 has returned to a more ‘normal’ mix of lower returns and higher volatility,” which “reflects rising economic uncertainty and less room for growth to exceed expectations,” but should not “spell the end of the equity bull market, now in its ninth year.” Continue reading for a more detailed analysis of the current market from both Nuveen Asset Management and BlackRock Investment Institute. [+] Read More

Sell in May and Go Away?

April 24, 2018

With the month of May approaching, it’s the time of year when we’re reminded of the old Wall Street saying, “sell in May and go away.” In theory, this suggests that an investor can sell out of the stock market on May 1st and get back into the market on November 1st to avoid the months where equity returns are typically depressed. While the saying “sell in May and go away” may be catchy, is it actually sound investment advice? Over the 50 years prior to 2016, during the 6-month period from May 1st through October 31st, U.S. stocks returned an average of 2.68%, while the 6-month period of November 1st through April 30th, U.S. stocks returned an average of 8.08%.[1] [+] Read More

Tax Reform Favors Charitable Giving From IRAs Finds Lord Abbett

April 19, 2018

Qualified charitable distributions (QCD) are poised to become even more popular under the new tax law. While the Tax Cuts and Jobs Act (TCJA) generally doubled the standard deduction, while eliminating many itemized deductions, financial advisors will want to update their clients on the potential tax-saving benefits of qualified charitable deductions (QCDs) now that they have been made permanent. Remember that a charitable contribution is itself an itemized deduction, so most taxpayers will no longer receive the full deduction value—unless all other itemized deductions exceed the standard deduction amount. In other words, far fewer taxpayers will itemize, thus fewer taxpayers will be able to take advantage of the deduction for charitable giving. [+] Read More

Rethink your Retirement Strategy with Goals-Based Wealth Management

April 17, 2018

An axiom you hear often in the financial world is that “every person’s financial situation is different.” That’s undoubtedly true. What you don’t hear often enough is that every person’s financial goals are different. Goals often tend to get stripped down and over-simplified in the planning process. For example, having a goal of “long-term growth” or “to retire at 65” is useful, but it is not specific enough to build a comprehensive plan around. The end result is that over-simplified goals often result in over-simplified retirement plans. Goals-based wealth management is designed to help investors avoid the over-simplification trap. The idea is try to be as specific as possible about each outcome you want in retirement. Just about everyone wants long-term growth. But does everyone want a mountain home in Colorado and to help with the down payment on their grandchildren’s homes? Probably not. Digging into the details matters, and usually reveals quite a lot about what your goals really are for retirement. Once you’ve made a list of goals that’s unique to you, your financial advisor can work backwards to make sure your investment plan addresses each one head-on. [+] Read More

Understanding How the U.S. Taxes Foreign Dividend Payments: Doug’s Quiz Corner

April 13, 2018

How Do Tax Credits and Tax Deductions Work for Foreign Dividend Payments? Your friend Emily made an investment in the stock of a company that is based outside of the U.S. This investment was made in her taxable individual account. She received $100 in dividends for this stock (net of foreign tax withholding) last year. She had no other investments in companies outside the U.S. [+] Read More

Main Management Reviews Q1 Market Volatility and Its Impact on the Uncertainty Index

April 12, 2018

Taking A Look Back at Major Market Milestones of First Quarter 2018 The first quarter of 2018 was anything but a continuation of the market behavior we saw in 2017. After historically low volatility and positive total returns for each of the 12 months in 2017, January continued the trend of higher markets with nearly historic lows in volatility. Then came February. Registering volatility levels below 15 for the month of January, the CBOE Volatility Index (VIX) spiked 116% on February 5, the highest daily move ever recorded. On that same day, the Dow Jones Industrial Average plunged 1,175 points, or -4.6%, its largest single-day point decline in history and the worst day performance-wise since August 2011. The volatility spike was so violent that it even resulted in the shutdown of a widely-traded inverse VIX product. [+] Read More

The True Cost of Homeownership

April 11, 2018

The act of buying a first home is often framed as a wonderful, life-changing experience. And to be sure, it almost always is. But it’s the process of buying the home that’s not always so picture-perfect, and in fact usually comes with an odd set of juxtaposed emotions: joy and frustration, surprise and shock, relief and anxiety, a feeling of stability but then also a feeling of uncertainty. In short, it’s somewhat of a wild ride for first-time homebuyers! Much of the ‘negative’ side of the emotion equation stems from a common source: unexpected costs. Many first-time homebuyers simply aren’t aware of the extensive list of fees and costs associated with buying a home, which is why a recent survey by TD Bank found that nearly 50% of homebuyers incurred more than $2,000 in unexpected charges during the home buying process. 10% of those surveyed said they spent at least $5,000 more than expected.[1] [+] Read More

How to Research a Money Manager

April 10, 2018

The age of the internet has given us a lot of good information, and it’s made research easier for the average person. Wondering who won the Oscar for Best Picture in 2017, what happens to muscles as you age, or how to train a cat? The answers are just a few keystrokes away. As information becomes more and more accessible, it’s become easier and easier to learn how to DIY thousands of activities that used to be regulated to the realm of learned experts (ie. car repair, investment management, and self-diagnoses). Even for those things that you choose to outsource to an expert – and there are more than a few things that are still worth outsourcing to a trustworthy expert – there is a huge amount of power in understanding (at least the basics) how their processes work. [+] Read More

J.P. Morgan Releases 2Q 2018 Guide to the Markets

April 5, 2018

J.P. Morgan Quarterly Guide to the Markets Now Available JP Morgan's Guide to the Markets (GTM) for the second quarter of 2018 is now available for your review. The comprehensive 71-page includes detailed charts illustrating: S&P valuation measures The length and strength of economic expansions Interest rates and inflation [+] Read More

Should You Be Concerned About Rising Interest Rates?

April 3, 2018

With interest rates spiking unexpectedly in early 2018 and the Fed poised to continue raising interest rates throughout 2018, some bond investors have become very concerned about experiencing negative returns in their bond holdings. While rising rates will have a negative impact on the price return of a bond investment, this impact can be offset by the positive impact of coupon income. A rising rate environment isn’t necessarily bad for bond investors in the long run because it will lead to higher coupon payments in the future. As interest rates rise, investors will demand higher coupon payments from newly issued bonds. Also, coupon payments from existing bonds can be reinvested in these newer, higher yielding bonds. [+] Read More

Nuveen Believes Market Fundamentals Remain Solid Over the Long-Term

March 29, 2018

Are investors overly pessimistic about downside market risks? While fundamentals haven’t changed significantly, volatility has picked up recently and stocks have been trading in a broad range between their early February highs and the low established in last month’s correction. The U.S. and global economies appear on sound footing, inflation pressures appear contained, the labor market remains strong, corporate earnings are solid and interest rates have been rising only modestly. Given this divergence between our views and market behavior, we think it makes sense to focus on why we think some risks may be overstated. Read a summary of Nuveen Asset Management's weekly investment commentary below, or download as a PDF. [+] Read More

Managing Health Care Costs in Retirement

March 28, 2018

It’s the retirement planning topic that, candidly, cannot be overstated or discussed enough: planning for healthcare costs. Crucial as this subject is, it arguably does not receive a proportionate amount of attention in retirement planning conversations around the country – which is ironic, given that retirees over the age of 65 are likely to spend a sizable percentage (~13% according to J.P. Morgan) of their total retirement income on healthcare. Let’s jump right into the numbers. AARP has created a useful calculator for estimating healthcare costs in retirement, which you can access here: Estimate Your Healthcare Costs in Retirement. [+] Read More

JP Morgan Examines Economic Growth and Employment

March 22, 2018

JP Morgan's weekly update offers investors an at-a-glance summary of economic news and reports.This week's update looks at: • Economic growth • Corporate profits • Employment • Changes at The Fed Read an excerpt from this week's update below, or download JP Morgan's complete economic commentary. [+] Read More

How Does Loss Aversion Affect Your Investment Goals?

March 20, 2018

Many readers have probably heard the axiom that investors “loathe losses about twice as much as they enjoy gains.” This notion that losses loom larger than gains is a behavioral finance idea known as “loss aversion,” and it’s been around since 1979 when two economists, Kahneman Tversky, formalized the idea in a paper called Prospect Theory. To give you an idea of just how widely accepted the idea of loss aversion is, Prospect Theory is the most cited paper in all of economics and the third most cited paper in psychology. [+] Read More

What’s the Best Way to Make Tax Efficient Gifts to Adult Children? – Doug’s Quiz Corner

March 16, 2018

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug helps you navigate tax efficient gifting strategies to help a friend transfer wealth to his adult son for school tuition and a future home purchase. Consider this Scenario: Your friend Gus is considering helping his son, Walter, with the cost of paying tuition and purchasing a new home over the next couple of years. Walter has two years of school left (including this year) and he is planning to purchase a home next year. [+] Read More

Nuveen Weighs the Effect of Trade Tariffs & Investors Bidding Up Stock Prices

March 15, 2018

Investors look past trade risks as stocks gain ground... President Trump’s proclamation of 10 - 25% trade tariffs dominated most of the financial headlines last week, but investors looked past the negatives to bid up stock prices. The S&P 500 Index rose 3.6% last week. Half of that gain came on Friday, following a strong labor market report that showed jobs increases and stable wages. For the week, industrials, financials, technology and materials were all up over 4%, while utilities lagged. Treasury yields also rose last week in the face of stronger economic data. Read a summary of Nuveen Asset Management's weekly market review below, or download the entire investment commentary as a PDF. [+] Read More

US Economy: The Current State of Affairs

March 14, 2018

When it comes to the current state of the US economy, it is difficult to find many problems. In fact, the data and trends appear to support the case for continued growth in the coming year – both for the economy and for corporations. Below, we dig into the data. Let’s start with the classic growth measure, GDP growth. According to the Bureau of Economic Analysis, a “second estimate” of US Real GDP growth in Q4 2017 showed an annual growth rate of 2.5%, which marked a slight but not significant drop from Q3 2017’s 3.2%. [+] Read More

In Their Own Words: Dorsey Wright Explains Selective International Investing Through Their Systematic Relative Strength Strategy

March 13, 2018

Although the US is arguably the largest and most diverse economy in the world, international diversification, where appropriate, might be to able help reduce the overall risk in your portfolio by investing non-correlated assets. While diversification does not guarantee profit or protect against loss in declining markets, international investing can be an important component of a well-diversified portfolio. [+] Read More

BlackRock Evaluates Short-Term Treasuries

March 8, 2018

Long on Short Bonds... The steady increase in shorter-maturity bond yields provides a thicker cushion against concerns around further rises in interest rates. Interest rates would need to jump more than one percentage point to wipe out a year of income in the two-year Treasury note. This is nearly double the cushion on offer two years ago – and far larger than the thin insulation provided by longer-term bonds today. We believe the short end offers relatively compelling income along with a healthy buffer against the prospects of further increases in yields. Read an excerpt of BlackRock's commentary below, or download the complete commentary now. [+] Read More

How Living Longer Should Impact Retirement Planning

March 7, 2018

If your financial advisor insisted on creating an investment plan that projected you and/or your spouse to live past 100, you might be skeptical. Few people at or near retirement expect to live to be 100. But retirees would be wise to start thinking that way! The Social Security Administration finds about one out of every four 65-year-olds today will live past age 90, and one out of 10 will live past age 95. There’s also a 4% chance one person in a couple will live past 100. That’s a low percentage, sure. But it is still a possibility very much worth planning for. [+] Read More

Brookmont Capital Management Named Top Guns Manager by Informa Investment Solutions

March 1, 2018

Brookmont Capital Management has been awarded a Top Guns designation by Informa Investment Solutions’ PSN manager database, North America’s longest-running database of investment managers. The Brookmont Dividend Equity Strategy was ranked as the #1 US Large-Cap Value Manager, #3 US Large-Cap Manager, and #5 US Equity Manager for the 10-year performance of the Dividend Equity Strategy. Learn more about the announcement, along with the measurement criteria used to determine the ranking, below or download the complete announcement as a PDF. [+] Read More

The Pros and Cons of Target Date Funds in Retirement Planning

February 28, 2018

Target date funds have been around for over 20 years, but over the last several years they have seemingly become a mainstay of 401(k) plans. For novice investors and those just starting out, the ‘target date’ feature of choosing a retirement date and “setting and forgetting” an investment strategy has understandable appeal. But for investors with larger amounts of assets under management and more complex financial situations and retirement needs, target date funds may not do the trick. Below we’ll explore some of the positive features and drawbacks of target date funds. [+] Read More

Nuveen Evaluates Environment for Market Growth, Volatility

February 22, 2018

Stocks recover ground as the focus returns to fundamentals... Stocks rebounded last week as investors appeared to return their focus to improving economic growth and solid corporate earnings. The S&P 500 Index jumped 4.4% and experienced its best week in more than five years. While stocks remain down for the month, they are back in positive territory for the year. Volatility also declined last week as markets calmed down slightly. Treasury yields rose last week as the yield curve flattened. At one point, the 10-year Treasury yield climbed to 2.94% before declining. While we may see further market volatility, it appears the worst of the recent correction is in the rear view mirror Read a summary of Nuveen Asset Management's weekly market review below, or download the entire investment commentary as a PDF. [+] Read More

Aging in Place: Retirement Planning for Home Care Costs

February 20, 2018

In the context of retirement planning, most people are naturally drawn to talking about travel, hobbies, grandchildren, and leisure activities. And for good reason – that’s what retirement is supposed to be all about! There is a necessary distinction between retirement and retirement planning, however. Planning must go beyond the ‘fun’ items and consider all expenses we may incur over time and throughout life. One of those expenses – and a major one – is the cost of health and home care later in life. [+] Read More

Stock Market Volatility: Could These Be Future Considerations for Investors?

February 16, 2018

Money Managers continue to reflect on the market volatility from last week, lessons learned, and consider what's to come. This week's post is another compilation of articles from three different money managers. Lord Abbett's day-by-day recap of last week's market ups and downs. Senior Portfolio Manager Bob Doll shares Nuveen's outlook on market volatility and other factors investors should consider, while Federated Investors focuses in on dividend investing in 2018. Lord Abbett and Company Nuveen Asset Management Federated Investors [+] Read More

Evaluating the Relationship Between Bond Investments and Rising Interest Rates: Doug’s Quiz Corner

February 16, 2018

What Happens to Bond Investments When Interest Rates Go Up? Consider this scenario: Your friend Bob is concerned about what rising interest rates could do to his bond portfolio. He asks for your assistance in evaluating his bond holdings. In his current bond portfolio, he has the following holdings: $10,000 face value AA rated municipal bond that matures in 3 months and is currently trading slightly below par. $15,000 of a mutual fund that holds investment grade, floating rate bonds. $20,000 of a short-term, investment grade corporate bond ETF which tracks a broad index of hundreds of bonds. $3,000 of a high yield bond ETF that tracks a high yield index of hundreds of bonds. Bob has a long investment horizon ahead of him and he won’t need any of the funds invested in his bond portfolio for many years. To top it off, Bob also has another $100,000 of his portfolio invested in various equity market investments. [+] Read More

Updated: JP Morgan Guide to the Markets for 1Q 2018

February 15, 2018

Updated with 4Q 2017 Data JP Morgan's updated Guide to the Markets for the first quarter of 2018 now includes financial data for 4Q 2017, including: S&P500 Earnings Per Share (EPS) Corporate earnings: capex vs. payouts Cash flow and corporate debt for S&P 500 companies This 71-page guide is full of charts that provide key insights into the labor market, housing, corporate debt and other key financial topics. Download J.P. Morgan's updated Guide to Markets for 1Q 2018, or continue reading to learn more about the information it contains. [+] Read More

The Cost of Having a Child

February 14, 2018

There are numerous planning considerations involved when starting or expanding your family -- lifestyle, career, living space…the list goes on. Arguably the financial component is near the top of the list. Most people planning for family know that it will impact their finances, but to what extent? Using data compiled by the U.S. Department of Agriculture (USDA), the estimated cost for a married couple on the West Coast (with a combined income greater than $107,000) to raise two children would be a somewhat startling $775,620. Dig-in a little further, and the data suggests that around $166,000 would go towards education/child care. The family could also spend upwards of $110,000 on food alone. The data and estimates are based on a study performed by the Department of Agriculture titled “Expenditures on Children by Families, 2015”. The USDA created a fascinating and free calculator that anyone can use to run the numbers for starting a family. You simply tell the calculator how many children you have or want, your income level, whether you’re single or married, and what region of the country you live in. And that’s it! The calculator does the rest. [+] Read More

How Inflation and Interest Rate Fears Could Have Been to Blame for Recent Market Volatility

February 8, 2018

Inflation worries caused by a single economic report have led to increasing concern that the economy may be overheated. A rapidly expanding economy could lead the Fed to increase interest rates at a faster than expected pace. The January Unemployment Report from the Bureau of Labor Statistics showed an increase in average hourly wages of 9 cents, pushing the annual increase to 2.9% from 2.6%. A couple points of caution on this report are needed. First, it is possible that some or even most of the wage increase is due to 18 states raising their minimum wage as of January 1st. If that is the case, this will likely be a one-time bump in average wages rather than a sustained trend higher. Second, there could be a temporary weather impact on this report (which won’t repeat once the weather gets warmer). Some workers were not able to work full-time because they couldn’t make it to work on certain bad weather days. If these workers were lower paid workers, that would push up the aggregate average hourly wage for January because the lower paid workers worked fewer hours. We’ll need to wait for the February, March, and April reports to see if the increase in average hourly wages is a trend or if the January report is just a blip on the radar. [+] Read More

Money Manager Commentary: Why Was the Market So Volatile This Week?

February 8, 2018

Money Managers have had plenty to say about the market volatility that started last week. That’s why this week we’re doing something different. The post below is a compilation of five different commentaries. As usual, you can read the excerpt below, or click the link to download the full version of each of the individual commentaries. Keep reading to see what the following money managers say about this week’s volatility. Lord Abbett and Company Cambiar Investors Nuveen Asset Management Federated Investors ClearBridge Investments [+] Read More

Financial Goals: The Importance of Salary Negotiations

February 7, 2018

Most readers have been down this road before. Work hard in your job and in your career, and you get to a point where it’s time to ask for a promotion or a raise (or both!). As workers and professionals, it is not outlandish to think of ourselves as assets just like stocks or real estate – we have a market value, and often times that market value increases over time because the company makes a profit or the property is in high demand. In that sense, salary negotiations are not all that different from stock investing – investors often pay a premium to own a good company, just as a company should pay a premium to have a valuable team member on staff. Negotiating a higher salary means asking for a fair value where the value is due. But there is another, crucial factor that gives importance to salary negotiations: Making more money can mean more aggressively pursuing our long-term financial and retirement goals. [+] Read More

BlackRock Commentary: An Upside U.S. Growth Surprise

January 31, 2018

A tax overhaul in the U.S. could spill over to benefit the global economy. The U.S. tax overhaul and higher expected federal spending points to faster growth just as the expansion enters its ninth year. This represents a of sea change from U.S. fiscal policy’s long drag on growth and bodes well for the synchronized, global expansion. Read an excerpt of BlackRock's evaluation below, or download the complete commentary now. [+] Read More

How to Financially Plan for Natural Disasters and Other Unexpected Events

January 31, 2018

2017 was a historic year for multiple reasons, but perhaps none more impactful than in the context of natural disasters here in the United States. 2017 was a record year when it came to cumulative damages from “weather events,” with the total cost reaching $306.2 billion. This number shattered the previous record set in 2005 of $214.8 billion, which was disproportionately caused by Hurricane Katrina in New Orleans. When people think about 2017 in terms of natural disasters, Hurricane Harvey, Irma, Maria, and the California wildfires probably come immediately to mind. But there were also hail storms in Colorado and Minnesota, drought and fire in the Plains states, three sizable tornado outbreaks, and flooding in California last February. The National Oceanic and Atmospheric Administration created this insightful graphic detailing the major weather events, many of which may still come as a surprise. In all, there were 16 weather events whose damages exceeded $1 billion. [+] Read More

Nuveen Evaluates Rising Risks, Recommends Pro-Growth Bias

January 25, 2018

We are not yet seeing warning signs that would signal a correction... Over the past 18 months, investor sentiment appears to have come full circle. In mid-2016, deflation fears reigned and investors seemed eager to embrace negative news. Since that time, however, optimism toward economic growth, earnings growth and stock market prospects have become the main investment themes. The most recent example of this trend is the incredibly positive reaction to last month’s tax bill, which has caused investors and analysts to forecast increasingly higher earnings results even as valuations are growing less attractive. Such an environment causes us to take pause and examine the risks. Earnings expectations are quite high. While we think they can still be met, the higher expectations rise, the harder it will be for results to beat estimates. Read a summary of insights from Nuveen Asset Management's Senior Portfolio Manager and Chief Equity Strategist Bob Doll below, or download the entire investment commentary as a PDF. [+] Read More

Why High Income Earners Can Still Benefit from a Budget

January 23, 2018

A high-income earner can benefit from a having a budget much like a professional athlete can benefit from having a personal trainer – even though the extra help and attention may not be completely necessary, it can serve to make a good situation even better. Much better. Consider that, simply put, two goals of closely maintaining a budget are to: Minimize waste Maximize efficiency Isn’t that what everyone wants when it comes to your hard-earned dollars? Let’s start with minimizing waste. One of the first steps in creating a budget is to itemize each and every monthly expense you incur. Mortgage payments, insurance, cable and internet, phones, memberships, subscriptions, utilities, food, entertainment, and so on. When was the last time you sat down and closely scrutinized all of these expenses? Doing so could very well reveal fat that needs trimming. [+] Read More

Navigating Your Finances Through Divorce

January 22, 2018

There’s really no way to sugarcoat it – though relationships are often filled with love and beauty, they can also be complicated and sometimes difficult to sustain over time. In recent years, January has earned the dubious honor of being nicknamed “Divorce Month,” as analysis of divorce filings between 2008 and 2011 revealed a spike in divorces in January through March.1 Life changes like divorce or separation almost always call for major financial adjustments, which can often feel like insult to injury. But it doesn’t have to be that way – working with your financial advisor can help you work through the process professionally, and can also prevent emotion from sifting into financial decision-making. That’s key to eliminating some of the financial consequences of divorce. [+] Read More

When is the Right Time to Hire a Tactical Money Manager?

January 19, 2018

Let’s start with a more basic question: what is a tactical money manager? To answer that, an investor must first understand “tactical asset allocation,” which is an active management portfolio strategy that aims to capitalize on certain anomalies and/or events in the markets. Many tactical money managers try to actively trade around such anomalies to gain a leg-up and produce what’s known as ‘alpha’ in a portfolio. Often times, the tactical money manager sees a situation in the market – whether it be bullish or bearish – and attempts to navigate a portfolio through it, with the aim of making a profit or avoiding a loss. In many cases, the manager may allocate back to the original asset mix once the ‘event’ passes, but not always. [+] Read More

Calculating the Impact of Expense Ratios on Returns: Doug's Quiz Corner

January 19, 2018

How Does An Expense Ratio Impact Returns? Consider this scenario: Your friend Martha has just invested $100,000 in a mutual fund that has an expense ratio of 1.50%. She has discovered an alternative investment that is very similar to the mutual fund she purchased but has an expense ratio of 1%. She is considering switching to the lower cost investment but isn’t sure if 50 basis points in an expense ratio will make much of a difference in her returns going forward. Assume both investments return 8% per year, each year for the next 10 years before expenses. What is the difference in ending dollar value between the mutual fund with an expense ratio of 1.5% and the alternative investment with an expense ratio of 1% at the end of 10 years? [+] Read More

BlackRock Evaluates Tax Overhaul Winners and Losers

January 18, 2018

Investors need to look beneath the surface to identify the longer-term winners... The Tax Cuts and Jobs Act is poised to boost a U.S. economy already running at full capacity. A windfall from lower taxes and incentives for capital expenditure could spur more consumer and business spending and corporate deal-making. A likely convergence in tax rates could create winners and losers, rippling across sectors and companies. Read an excerpt of BlackRock's evaluation below, or download the complete commentary. [+] Read More

Financial Planning for…Pet Owners?

January 17, 2018

For about 85 million Americans, owning a pet is a joy and marvel of everyday life. Indeed, according to the 2017 - 2018 National Pet Owners Survey, about 68% of US households own a pet. This marks a remarkable 56% increase from pet ownership levels in 1988, the first year the survey was conducted. That’s a lot of furry and fuzzy (and fishy and flighty) friends across the country. Many of these pets are considered a part of the family because of the companionship they offer. According to a 2015 poll, 95% of pet owners in America think of their animal as a member of the family; even going so far as to buy them birthday presents! This perhaps explains why for many, no amount of money can replace the happiness and health benefits of owning a pet. [+] Read More

JP Morgan Guide to the Markets for 1Q 2018

January 11, 2018

JP Morgan Quarterly Guide to the Markets JP Morgan’s Guide to the Markets for the first quarter of 2018 is now available for your review. The comprehensive 71-page guide includes 65 pages of charts illustrating: Trends across equities, the economy, the fixed income sector and international investing Returns and valuations by style and by sector Fixed income yields and returns Annual returns and intra-year declines of the S&P 500 Investor allocation by region The power of compounding The retirement savings gap [+] Read More

A New Era of 401(k) Millionaires

January 10, 2018

Fidelity Investments recently produced research that unveiled a surging population of 401(k) millionaires: women. According to Fidelity’s findings, the share of women who have accumulated $1 million or more in retirement plans has doubled over the last 12 years (based on data from 15 million retirement plan participants in Fidelity 401(k) accounts). As of the end of September 2017, about 20% of Fidelity’s 401(k) millionaires were women, which is up from less than 10% in the same period in 2005. What does it take to grow a 401(k) to $1 million and above? Many things, but if we were to narrow it to just three, it would be: consistent saving, smart investing, and time. The women in Fidelity’s research have leveraged all three to become millionaires. [+] Read More

The Final Tax Bill – Special Report

December 28, 2017

On December 22, 2017, President Trump signed into law the tax legislation known as the “Tax Bill.” The majority of the tax law’s provisions go into effect in January with just a handful delayed until 2019 or after. The signature provision of the law – and where the biggest tax cut was dealt – fell to corporations, where the tax rate was cut from 35% to 21%. A cut this sizable could have a direct impact on corporate earnings, which could flow-through to stock prices in the near to medium term. [+] Read More

JP Morgan Recaps Year-End Economic Data

December 28, 2017

JP Morgan's weekly update offers a snapshot of changes in the economy and potential implications for investors. This week's investment themes include: • Earnings growth, coupled with slowly rising interest rates, makes stocks look attractive in relative terms. • High-yield bonds look more attractive than Treasuries, but a diversified approach to fixed income investing seems appropriate given Fed tightening. • International exposure is warranted given growth prospects abroad, and a weaker dollar can enhance foreign returns. [+] Read More

Have you heard of the “January Effect”?

December 27, 2017

You many have heard people speak about the "January Effect," but what does it actually mean? In short, the January Effect is a concept suggesting that the first month of the year tends to experience a seasonal increase in stock prices. Some even take the anomaly a step further, suggesting that a positive January means a positive calendar year. With January around the corner, does the “January Effect” concept hold water? Let’s investigate. [+] Read More

Nuveen Reviews 2017 Predictions and Looks Ahead to 2018

December 21, 2017

As the year draws to a close, it appears more of our predictions are correct than not... We have been describing 2017 as a “Year of Transition." We expected improving economic growth, accelerating corporate earnings and rising interest rates. We also predicted rising volatility amid equity market leadership changes. Depending on movements of a few basis points for the 10-year Treasury yield, we are likely to get either 7 or 7½ of our 10 predictions correct. Read an excerpt of Nuveen's 2017's predictions in review, or download the entire investment commentary as a PDF. [+] Read More

Test Your Knowledge on Treasury Inflation Protected Securities (TIPS) Bonds - Doug's Quiz Corner

December 15, 2017

Protecting Principal Against Inflation via TIPS Your friend Karen is concerned about inflation increasing so she purchases $1,000 of a Treasury Inflation Protected Securities (TIPS) bond with a semi-annual coupon payment of 2%. TIPS are unique in that the principal amount ($1,000 in this case) will increase with inflation. For example, if there was 3% inflation over the first six months of the bond, the principal amount would adjust to $1,030 ($1,000 x 1.03 = $1,030). Karen isn't quite certain how the semi-annual coupon payments on TIPS work, so she asks for your help. She thinks inflation will be 2% over the first 6 months of owning the bond and 3.25% for the six months following. What is the total amount of coupon payments would she get from her TIPS bond over the first year under this scenario? $20 $20.53 $20.73 $20.80 (Answer below...) What are Treasury Inflation Protected Securities (TIPS)? According to Investopedia treasury inflation protected securities (TIPS) refer to a treasury security that is indexed to inflation to protect investors from the negative effects of inflation. TIPS are backed by the U.S. government and their par value rises with inflation - as measured by the Consumer Price Index - while the interest rate remains fixed. [+] Read More

BlackRock Shares Its Outlook on Global Investing in 2018

December 14, 2017

We see stable global growth with room to run... Setting the scene: the eurozone is enjoying its fastest economic expansion since 2011. EM (Emerging Markets) growth looks self-sustaining, even if powerhouse China slows more than markets currently expect. The breadth of the global recovery has expanded: Manufacturing figures are up in about 80% of countries, a share that has steadily increased over the past year. And U.S. tax cuts could provide a decent dose of fiscal stimulus. The caveat? Consensus expectations have mostly caught up with our GPS for G7 economies over the past year. See the "More growth, less upside" chart on page 3. This suggests less investor drive to play catch-up and embrace the positive growth outlook. Overall, we see very steady growth, coupled with still subdued inflation and low interest rates, as positive for risk assets — but with returns more muted. We expect global economic growth to chug along in 2018, but see less room for upside surprises to lift markets. Read an excerpt of BlackRock's key views below, or view the entire Global Investing Outlook for 2018. [+] Read More

Pros and Cons of Dividend Investment Strategies

December 13, 2017

Should an investor consider owning dividend stocks? If so, why? And when? In this piece, we delve into the realm of dividend stock strategies. We’ll look at why dividend stock strategies are important, how they can fit into a broader investment strategy, and why investors may want to consider them now. What is a Dividend Investment Strategy? Let’s start with the basics. Generally speaking, a dividend investment strategy is an investment strategy tailored to invest in dividend-paying companies. Asset managers who specialize in owning dividend-paying stocks often have different criteria for the types of companies they want to own. For example, some managers may want to own companies that pay a healthy size dividend, while others may care more about the company having a history of increasing their dividend payments over time. Or, perhaps the manager is looking for companies with a long history of consistent dividend payments versus companies that only recently started paying dividends to shareholders. [+] Read More

What Will the Final Tax Legislation Look Like?

December 11, 2017

The Senate and the House have passed their own versions of tax reform, but the work of making tax reform law is far from over. From here – and perhaps over the next few weeks – a conference committee of House and Senate Republicans will convene to try and iron out the differences between the two bills. This reconciliation process is no layup, but conference committee proceedings also rarely fail. The bigger question at hand may not be if Republicans can get tax reform done. But rather: can Republicans have a bill on the president’s desk by Christmas? Time will tell. As the debate rolls on in Congress, we thought it’d be a good opportunity to look at some of the key features of the bills – what they have in common, and where the biggest differences lie. [+] Read More

Lord Abbett Shares Year-End Retirement Checklist

December 7, 2017

Review your retirement plans to maximize potential savings for you and your family... Lord Abbett's 2017 Retirement Tips - Year End Checklist includes important information for anyone who turned age 50 or 70½ in 2017, and for investors taking required minimum distributions (RMDs). The article also addresses common retirement investing questions such as: - Can you make IRA contributions if you participate in an employer-sponsored retirement plan? - What can you do to optimize the tax implications of converting a traditional IRA to a Roth IRA in 2017? - Did you make a nondeductible (aftertax) IRA contribution? - If you are subject to RMDs, have you included the value of all your IRAs in the calculation? Continue reading to review some of Lord Abbett's year-end retirement tips, or download the complete checklist and review your retirement plan. [+] Read More

Are You the Beneficiary of an IRA? You May Need to Take a Required Minimum Distribution

December 6, 2017

When most investors/retirees think of Required Minimum Distributions (RMDs), they think of turning 70 ½ and having to take mandatory distributions from an IRA. The federal government allows savers to make tax deductible contributions (with tax deferred growth) to IRAs/401(k)s/qualified retirement plans throughout their working lives, but the party ends when folks turn 70 ½. Uncle Sam eventually gets his cut. There’s one feature of RMDs, however, that is less widely known. That is, if the account owner passes away and there is still a balance in the qualified retirement account, it is the responsibility of the beneficiary to take the required distributions, whether that be the spouse, a child, a charity, a trust, and so on. Not taking the required distributions can result in a 50% excise tax penalty on the amount not withdrawn, so it’s important to understand these rules. We’ll break them down more clearly for you, below. [+] Read More

Presenting WrapManager's Q4 2017 Top International Equity Money Manager Picks Report

November 30, 2017

While the United States represents the largest single contributor to global GDP, 75% of the world’s GDP is taking place across our borders in other countries. That means that from an investing standpoint, an international equity strategy can help diversify your portfolio and take advantage of the many investment opportunities available outside of the U.S. Though we have seen that historically there have been market cycles where international equities outperform U.S. equities[1], there can be a tendency for many American investors to have a home bias that favors domestic investment and largely ignores non-U.S. opportunities. [+] Read More

The Retirement Question Advisors Forget to Ask

November 29, 2017

Investor education materials focused on retirement planning tend to try and answer the essential questions: how do you get yourself retirement-ready from a savings and investment standpoint? And, when are you planning to retire? These are the critical questions that define everything from how much you defer to your company retirement plan to how you structure your portfolio. In short, digging into these questions creates a solid foundation for retirement planning. But the question missing from this foundation is arguably just as critical to the planning process, yet it often gets left out. That question is: Where do you plan on retiring? [+] Read More

Lord Abbett Explores Yield Curve Effect on US Stocks

November 23, 2017

In part one of a two-part Market View, Lord Abbett explored investor concerns about the ongoing flattening of the yield curve. A flat two-year–10-year U.S. Treasury yield curve suggests an expectation of falling short-term interest rates, or an extended period of very low short-term rates, corresponding to presumptions of a weak U.S. economy and disappointing corporate earnings. In turn, those developments would have negative implications for U.S. equity prices. To address those concerns, Lord Abbett turned to Giulio Martini, Lord Abbett Partner and Director of Strategic Asset Allocation for his views on the yield curve and its relationship to economic growth, corporate profits, and, ultimately, U.S. equity prices. Read on for an introduction to Martini's analysis, or view the entire document here. [+] Read More

How Your Wealth Manager Can Help You with Major Life Changes

November 22, 2017

Life changes come in many forms. Some are joyous occasions—marriage, the birth of a new child, a job promotion, sending a child to college, selling or starting a business, or one of our mainstays, retirement. Other times life changes are more challenging. These might include the passing of a family member, an unexpected illness, divorce, or sending a child to college. Yes, we purposely mentioned college twice! (While wonderful, we know college can be very expensive for parents and sometimes a heartbreaking transition). [+] Read More

After Tax Yield: Doug’s Quiz Corner

November 17, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug discusses a strategy for getting a higher after tax yield. Consider this Scenario: Your friends George and Kathy are analyzing the holdings in their taxable joint account. They own $100,000 of an ETF that holds taxable bonds. This ETF has a yield of 2.30%. Assume George and Kathy have a federal tax rate of 28% and a state tax rate of 5%. George and Kathy are considering replacing the taxable bond ETF with a municipal bond ETF that has a yield of 1.85%. Assume that the dividends for this municipal bond ETF are exempt from Federal and State taxes. Does it make sense for George and Kathy to replace the taxable bond ETF with the municipal bond ETF in their taxable joint account? [+] Read More

Nuveen Looks Ahead to Future of the Bull Market, Tax Reform in 2018

November 16, 2017

The bull market in equities is aging but remains very much intact... For more than a year now, equity markets have enjoyed an unusual combination of low volatility and near-uninterrupted price gains due to a combination of accelerating economic growth, improving earnings, accommodative monetary policy and still-low inflation. Economic growth should continue to improve, but expectations have risen, which means positive surprises will be harder to come by. At the same time, central bank policy is slowly tightening, which could contribute to market volatility. Additionally, accelerating growth and tighter policy may finally trigger an uptick in inflation, especially in wage inflation given the low level of unemployment. Should this occur, we expect bond yields will climb, which could jolt other financial assets including equity markets. We don’t expect yields to rise unimpeded, but an ascending period of peaks and troughs looks likely. Read an excerpt of the complete commentary below, then download the entire investment commentary as a PDF. [+] Read More

Tax Planning: Don’t Forget Your Required Minimum Distributions

November 15, 2017

Republicans on Capitol Hill are currently working to make major changes to the tax code, but one tax rule does not seem likely to change anytime soon: required minimum distributions (RMDs). For most of our lives, investors have the benefit of saving into IRAs, 401(k)s, 403(b)s, etc. with tax-deductible contributions and tax-free growth, but eventually the day comes when Uncle Sam gets his cut. That starting point when the IRS requires you to withdraw from your IRA or other retirement account for is by April 1 of the year following the calendar year in which you reach age 70½ (which is 6 months after your 70th birthday). For example, if you are retired and you turned 70 on June 30, 2017, then December 30, 2017 marks the day you reach 70 ½. That means you must take your first RMD for 2017 by April 1, 2018. Every year thereafter, you have until December 31 to get it done. [+] Read More

BlackRock Asks: Where Is the US Dollar Headed?

November 9, 2017

We see a mildly stronger U.S. dollar (USD) ahead... A key U.S. dollar index has depreciated roughly 7% this year. Some are betting on further declines; speculative short positioning is at three-and-a-half year highs in the futures market. We believe this positioning buildup led to an April break in the usual positive correlation between the USD and the U.S. yield premium over other developed markets. Yet we see the USD’s broad uptrend since mid-2014 slowly resuming as monetary policy divergence re-emerges. The Fed is normalizing rates while the European Central Bank and Bank of Japan maintain easier policies, and the positive correlation between the USD and yield premium has returned. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire BlackRock weekly investment commentary here. [+] Read More

Working and Claiming Social Security...At the Same Time

November 8, 2017

The traditional arch of a person’s financial life is generally to work, save, retire, collect Social Security and/or pension, and make withdrawals from IRAs/investment accounts to supplement retirement income. It’s a traditional arch, but it is also a steadfast one. However, did you know that you could actually continue working and collect Social Security at the same time? There are rules and stipulations for doing so, which we will get into below, but the short answer is that you can! This is good news, particularly given that an increasing percentage of people are choosing to work later into life, for a variety of reasons but mostly because they enjoy working and want to stay involved: [+] Read More

Lord Abbett Reviews 2018 Retirement Plan Limits

November 2, 2017

The Internal Revenue Service (IRS) has released their retirement plan limits for 2018. Lord Abbett believes the information provided to be an accurate statement of current rules; however, prospective investors should consult with an investment professional and/or tax advisor. Read on for a summary of changes, or view the entire document here. [+] Read More

Tax Prep: Gifting Strategies

November 1, 2017

With less than two months left in the year, time is running out to take actions that will apply to the 2017 tax year. By ‘actions’ we mean things like charitable giving, tax loss harvesting, and in the case of this post, gifting. Gifting and estate planning can be complex undertakings, due to the myriad of rules, strategies, and even loopholes involved. But the concept of gifting by itself can be rather simple: in 2017, you can give any number of people (it doesn’t matter how many) up to $14,000 in cash or other property without triggering any gift tax. If you include your spouse in the gift, that number jumps to $28,000. An example with actual numbers should underscore just how impactful gifting can be. Say for example that you and your spouse make annual gifts of $28,000 to each of your three children and seven grandchildren. Over a period of 5 years, you will have gifted $1,400,000 – which also reduces the value of your estate for tax planning purposes by $1,400,000. Assuming the federal estate tax rate of 40%, that could mean saving $560,000 in estate taxes (40% x $1,400,000). [+] Read More

Nuveen Asks What Matters and What Doesn’t for Equities?

October 26, 2017

Investors remain calm as equity prices move higher against a backdrop of very low volatility... Investor attention remained focused on Washington, D.C. last week. The Senate passed a budget resolution, while President Trump is set to announce who he will select as the next head of the Federal Reserve. These factors, combined with ongoing solid economic data, allowed the so-called reflation trade to continue as higher-risk financial assets gained ground. U.S. equities notched their sixth consecutive week of gains... Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

What is Tax Loss Harvesting?

October 25, 2017

The White House released an outline for major tax reform in September. There are some ambitious goals in the plan: reduce seven individual tax brackets down to three, lower the corporate tax rate by 15%, eliminate the estate tax, nearly double the standard deduction while eliminating most itemized deductions, and much more. There could be some major changes ahead. But since so much remains up in the air as Congress debates the issue and actually writes the new law, it may not be worth diving into the details just yet. Instead, we’ll focus on a tax issue that is fast approaching for many investors: tax loss harvesting in preparation for your next tax filing. [+] Read More

Traditional vs Roth IRA Strategies: Doug’s Quiz Corner

October 20, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug compares traditional IRA versus Roth IRA contribution strategies. Consider this Scenario: Your friend Max would like to contribute money to a retirement account and he is determining whether to contribute to a traditional IRA or a Roth IRA. Assume Max is eligible to contribute to either of these options. Max has a current income tax rate of 25% and he expects to face an income tax rate of 25% after he retires. [+] Read More

Dorsey Wright Evaluates Low Volatility, Global Investments

October 19, 2017

The lack of volatility is puzzling considering current events... This year, one of the big market stories has been the lack of volatility. Pullbacks have been incredibly shallow as the market has been grinding upward this year. As of the end of the quarter, it had been about 10 months since the S&P 500 had experienced a 3% drawdown or larger. The extremely low volatility is bringing more investors back to stocks, and making investors less fearful of equities. These are both good things for momentum, which is performing well this year. Read the entire Dorsey Wright Q3 market commentary here. [+] Read More

High Earners Still Need an Investment Plan

October 18, 2017

What does it take to be a top income earner in the United States? We found some data recently that breaks it down, telling us just how much you’d need to earn in order to give you a place at the top. Here are some of the numbers by age. In other words, you’d need to earn this much each year to be a top 1% earner in the US:1 Age 35: $291,000 Age 45: $458,000 Age 55: $453,000 Age 64: $473,000 Having a high income may seem like it’s an automatic for also having financial security, but it isn’t. High earners still need an investment plan. Making a lot of money also often means having high living expenses, which makes management all the more important. Case in point: multi-millionaires who find themselves bankrupt far too early in retirement – and sometimes even before they retire. We’re going to pick on professional athletes here, for two reasons: 1) they often qualify to be top 1% earners in their active years; and, 2) there are numerous instances where financial mismanagement led to bad outcomes. [+] Read More

Protecting Your Online Identity: Simple Steps for Better Internet Security

October 13, 2017

In light of the increased security concerns caused by the Equifax data breach and the increased extent of the Yahoo data breach, we feel it is important to remind clients of ways that you can protect yourself from identity theft and other data theft. Below are four easy steps that you can take today to help protect your internet security. [+] Read More

JP Morgan Guide to the Markets for 4Q 2017 Released

October 12, 2017

JP Morgan Reviews Investing Opportunities & Rate Expectations JP Morgan’s Guide to the Markets for fourth quarter 2017 is now available. This comprehensive, 60+ page guide includes insightful charts illustrating: Corporate profits and financials Fixed income sector returns Local investing and global opportunities Federal funds rate expectations [+] Read More

Do You Have a Retirement Income Plan? Most Retirees Don’t

October 11, 2017

The key word in the title of this article is “income.” Many retirees believe they may have a retirement plan (at least generally speaking), but when it comes to having a retirement income plan, the numbers don’t look so good. According to new research from LIMRA Secure Retirement Institute, “only 35% of retired clients and 38% of pre-retirees who work with an adviser have a formal written retirement income plan (emphasis ours).”1 Do you have one? Not having a formal, written retirement plan and retirement income plan may decrease the confidence many retirees feel about having enough money in retirement. Unfortunately, with decades of retirement education and growth in the advisor business, retirees are not getting much more confident about retirement security. According to the Employee Benefits Research Institute, in 1993, only 18% of workers felt “very confident” about being able to afford a comfortable retirement. Fast forward to 2016, and there are still only 18% of workers who feel “very confident.”2 When considering that the Dow Jones Industrial Average has risen more than 500% over the period from January 1993 to December 2016, one would think that retirement confidence would be higher. But something is clearly amiss. [+] Read More

JP Morgan Assesses Future Asset Allocation

October 5, 2017

Given our positive view on growth, we maintain a pro-risk tilt in our asset allocation. As the U.S. economy moves into late cycle, we are naturally more attuned to any dip in higher frequency data, but currently we see little risk of recession in the next 12 months. As a result, we remain overweight (OW) stock-bond and underweight (UW) duration—albeit with slightly lower conviction in light of the failure of inflation expectations to advance alongside other macro data. Correlation across regional indices remains low, favoring broad diversification across global equity markets. But at the margin our most favored regions remain the eurozone and Japan, ahead of the U.S. and emerging markets, with the UK our least preferred region. In bond markets we expect yields to grind higher over the fourth quarter and see U.S. Treasuries outperforming most other sovereign markets, in particular German Bunds, which look vulnerable given the robust level of eurozone growth. Elsewhere we remain neutral on credit, real estate and commodities, and UW cash. In a distinctly mature credit cycle, returns from credit will come from carry rather than capital appreciation; nevertheless, we expect credit to outperform government bonds even if it lags stocks. Overall, we take a pro-risk stance in our portfolios but are mindful that with the economic cycle maturing, liquidity and diversification are paramount. Read the entire market commentary here. [+] Read More

How Do You Know it’s Time to Hire a Wealth Manager?

October 4, 2017

For some investors, hiring a wealth manager is a no-brainer. Whether it’s because finance and investing was not your chosen profession, or because you enjoy spending time doing other things, managing your financial life may feel like something best handled by a professional. Easy enough. For others, the decision to hire a wealth manager or financial advisor is not as clear-cut. There are “do-it-yourselfers” who prefer self-managing; people who keep all of their retirement assets at the bank or in the old company 401(k) plan; and even those who want to hire an advisor but simply don’t understand enough about the wealth management profession to know where to start (if that’s you, start here.) [+] Read More

An Initial Look at Trump’s Tax Reform Framework

September 28, 2017

After campaigning hard for the importance of tax reform, President Trump and his advisors released an early stage tax code change framework on Wednesday, September 27. From his podium in Indianapolis, IN, Trump explained that his framework would cut taxes for businesses and individuals and potentially deliver a “middle class miracle.”[1] As he put it, “…we will cut taxes for the everyday, hardworking Americans…”[2] While the House and Senate will still have significant work to do to in order to finalize the tax plan and craft new legislation, the initial review of Trump’s framework has some substantial changes to the current tax law, which could represent the largest tax reform change passed in 30 years.[3] [+] Read More

ClearBridge Investments Looks Beyond FAANGs to Semiconductors

September 28, 2017

Tremendous growth in software functionality has only been enabled by tremendous growth in semiconductor performance... U.S. equity market returns over the last several years has been driven by the performance of a select group of large cap information technology and Internet stocks that have come to be known as the FAANGs, for Facebook, Amazon.com, Apple, Netflix and Google (now known as Alphabet). Our investment teams have shared concerns about the crowding effect that the outlier performance of this group has created. While these companies possess unique business models and maintain strong long-term growth potential, we believe more attractive current opportunities may be found in looking beyond the FAANGs to other areas of technology, such as semiconductors. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

Fair Weather Money Manager Fan? What Data Tells Us about Short-Term Investments

September 27, 2017

Just about every sports fan knows the joy of rooting for your favorite team when things are going well, when the wins pile up. But the opposite can also be true – in those years when your team is “rebuilding” (which is really a euphemism for losing all the time), it’s easy to jump ship and wait it out elsewhere. If you think sports fans are fickle or “fair weather,” investors arguably take it to an entirely new level. The research firm DALBAR tracked how often investors “switch teams,” or how often they move from mutual fund to mutual fund and/or strategy to strategy. They collected some fascinating data in the research process, and we’ll dig into their findings below. [+] Read More

Accepting Bond Tender Offers: Doug’s Quiz Corner

September 22, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug discusses the complexities of bond tender offers. Consider this Scenario: Your friend Patricia has received tender offers on two bonds that she owns. A tender offer is a formal offer to buy bonds from the current holders at a specified price. [+] Read More

Nuveen Expresses Confidence in Bull Market

September 21, 2017

Despite Roadblocks, Expect the Bull Market to Continue... Following a down week for stocks, investors adopted a risk-on approach, moving back into equities. While the damage from Hurricane Irma was devastating in terms of human costs, the economic impact was less severe than feared. The S&P 500 Index rose 1.6% last week and all major U.S. indices reached new highs. As part of the broader outperformance trend among risk assets, Treasuries were weaker across the yield curve last week, the dollar rose slightly, gold prices fell and oil moved higher. Read an excerpt of the complete commentary below, or download the complete commentary as a PDF. [+] Read More

The Financial Risks of Cognitive Decline

September 20, 2017

When it comes to investment planning and setting up plans for life in retirement, it would be wonderful if we could just focus on growth, investment, spending, and financial security for you and your family. Those are the exciting features of planning that – while not always easy to work through – are challenges that are rewarding to solve. But proper investment planning should also include addressing issues that are often difficult for families to discuss. One of those issues is cognitive decline. According to State Street Global Advisors, only about 39% of investors believe they have a suitable plan if their decision-making ability becomes diminished. That number may be low because of the following statistic: while 85% of advisors report encouraging their clients to have a plan in case of cognitive decline, only 41% of investors think they actually need one. [+] Read More

BlackRock Sizes Up Hurricane Relief and the Fiscal Cliff

September 14, 2017

We see more political uncertainty ahead... Washington averted an imminent fiscal crisis, but the result could be a steep fiscal cliff in December or early 2018. We see heightened political uncertainty toward year-end as the U.S. Congress must revisit lifting the federal borrowing limit and funding the government. We could see this delaying and reducing the scope of any tax reform. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire weekly investment commentary here. [+] Read More

Retirement Investing: Needs vs. Wants

September 13, 2017

The conventional wisdom is that once a person retires, they should pare back exposure to stocks and focus instead on a more balanced, conservative approach. Perhaps the most-used description for this type of retirement strategy is “capital preservation.” But what if, somewhat contrary to intuition, capital preservation actually meant that investors needed to maintain a significant allocation to stocks? This is where retirees may have the tendency to mix-up their investment needs vs. wants. Retirees tend to want steady, conservative returns, which makes the argument for allocating more to bonds and cash. But what retirees may actually need is long-term growth to account for cash flow needs and rising expenses over time, which makes the case for allocating more to growth assets, like stocks. [+] Read More

Concerned About the Equifax Breach? Here’s How to Freeze Your Credit

September 11, 2017

Over the past few days we’ve had many clients mention their concerns about the Equifax data breach, which got us talking about how to protect your credit if it’s possible your personal information is at risk. And, as the number of impacted Americans continues to grow, it’s worth knowing what options you have to protect yourself from fraud. Equifax built a Cybersecurity Incident website for you to see if your personal information has been impacted - check to see if your security was impacted here. While some people are considering Equifax’s own credit monitoring service, another option that you have is to freeze your credit across all three major reporting agencies. But what does that mean, and how do you do it? A Quick Explanation Freezing your credit basically places restrictions on who can view your credit report. Once your credit is frozen only yourself, existing lenders, or their debt collectors will be able to see it, according to federal regulators. (Government agencies carrying out a search warrant or subpoena are still able to access your credit records as well.) [+] Read More

Nuveen Estimates Hurricane Harvey’s Impact, Risks Ahead

September 7, 2017

We advocate sticking with a pro-growth investment stance... The devastation caused by Hurricane Harvey dominated the news last week. From an economic perspective, damage to the region’s energy infrastructure is likely to cause local disruptions and contribute to a temporary increase in gasoline prices. But we expect the broader economic and market effect to be limited. Equity prices rose for a second straight week, with the S&P 500 Index up 1.4%. Health care, technology and industrials led the way, while financials and bond proxies such as telecommunications and utilities fared the worst. Read an excerpt of the complete commentary below, or download the complete commentary as a PDF. [+] Read More

What Investors Need to Know About the Disposition Effect

September 6, 2017

Part of being an astute investor involves hours of analyzing the capital markets, actively researching the companies and strategies you invest in, and staying up to speed on current events. That’s plenty of work on its own. But there is another aspect to smart investing that generally receives less attention but is arguably equally important. It involves studying ourselves – our behaviors and tendencies as investors, how and why we make investment decisions, and how those decisions may impact our returns over time. Most of this research falls within the field of Behavioral Finance, which challenges the assumption that “individuals act rationally and consider all available information in the decision-making process.”1 Investors rarely do those things, and that’s why studying behavioral finance can be so beneficial. The general thinking is that the more we understand the decision-making process, the better equipped we can be to help investors avoid common mistakes while simultaneously establishing guidelines for a disciplined investment process. [+] Read More

5 Things to Know about Health Savings Accounts

August 30, 2017

With all the hoopla about health care over the last several months, you may have heard the term “Health Savings Account” tossed around here and there. In short, Health Savings Accounts (HSAs) are tax-exempt accounts available for people in certain high-deductible health plans. Since people with high deductible health plans by definition incur significant out-of-pocket expenses before the insurance kicks-in, HSAs allow them to plan ahead by socking away money in a tax advantaged way.2 Think of it as having a savings account for your medical needs. As we will cover below, however, HSAs are not for everyone, and there are other features you should understand if you’re exploring them as part of your plan. Here are five of those features: [+] Read More

Nuveen Weighs Effect of Political Uncertainty on Stocks

August 24, 2017

Escalating Political Uncertainty Drags on Stocks As last week began, attention was focused on attempts to dial back tensions between the United States and North Korea. As the week progressed, investor focus turned to the backlash over President Trump’s comments in the wake of the violence in Charlottesville. Despite good economic and earnings news, the negatives won out and stock prices fell for a second week, with the S&P 500 Index dropping -0.6%. Global financial markets are enduring a bumpy phase, largely due to rising geopolitical tensions and domestic political uncertainty. While the damage to equity markets and other risk assets has so far been minor, investors are focusing on potential downside risks that could trigger additional damage. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

What If You Have to Retire Earlier Than Expected?

August 23, 2017

Life is full of detours and unknowns, and in many cases retirement planning is too. Sometimes people are forced to change jobs, to give financial help to family members in need, or to buckle down and save less during an economic downturn. But other times the detours are welcomed ones: a person relocates for a better paying job, gets the opportunity to do contract work during retirement for extra income, or maintains good enough health to work later into life. The bottom line is that retirement planning is different for everyone. The path to retirement we ultimately take may not be the one we originally planned. [+] Read More

BlackRock Evaluates Indifferent Investor Sentiment

August 17, 2017

Investor sentiment shows more signs of fatigue than euphoria... Equity markets have greeted positive earnings reports largely with indifference. Investor sentiment shows more signs of fatigue than euphoria, even as stock markets have repeatedly reached new highs this year. Yet we see solid fundamentals and returns in the second half, with the latter largely tracking earnings growth. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire weekly investment commentary here. [+] Read More

Foreign Investments Return: Doug’s Quiz Corner

August 15, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug discusses returns on foreign investments. [+] Read More

Do Men and Women Invest Differently?

August 15, 2017

There are countless studies out there trying to answer questions about how – and why – men and women invest differently. Do men tend to take more risks? Are women better at committing to a long-term strategy? Should advisors take different approaches with men and women as a result? A comprehensive study performed by Merrill Lynch offers a somewhat surprising, but also no-nonsense explanation when it comes to finance and investing—men and women aren't all that different. Human beings, no matter what their gender, all share a common trait that can affect how we make investment decisions – our emotions. On the other hand, the strengths of a good investor, such as patience, analytical attention to detail, and long-term focus are common across both men and women. In this post, we will take a look at some of the findings of Merrill Lynch’s research paper, titled “Women and Investing: A Behavioral Finance Perspective.” Perhaps the most important finding of them all, however, comes straight from the lead researcher and Head of Behavioral Finance at Merrill Lynch Wealth Management, Michael Liersch: “What should really drive investment decisions are your financial priorities, and those are very personal. They have nothing to do with gender.” [+] Read More

Nuveen Evaluates Economic Growth, Recession Risk

August 10, 2017

Risks Appear Tilted to the Upside for Stocks Although economic data was positive and earnings continued to be strong, U.S. equities were mixed last week. Markets appear to be in a holding pattern, with investors waiting for more news on Federal Reserve balance sheet normalization and tax policy. For several months, volatility has remained low while equity prices have grinded unevenly higher. This has prompted many investors to look for signposts that could cause a change in direction. Possible dangers could include the end of emergency zero-interest-rate policies, high global debt levels, slow productivity growth or political instability caused by such issues as widening income inequality or rising protectionism. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

What is the Federal Reserve?

August 9, 2017

The Federal Reserve (Fed) met on July 25 and 26 with little fanfare, since they did not end up raising interest rates. In a statement, the Fed said the job market continues to strengthen, but inflation remains somewhat of a concern. Inflation metrics have fallen below the 2% threshold the Fed considers healthy, and as such the central bank will be “monitoring inflation developments closely.” The Fed gets quite a bit of media attention, and it got us thinking: for many normal investors and retirees, the Federal Reserve is probably an institution shrouded in mystery. What is the Federal Reserve? How did they come into existence? Are they as important as everyone says they are?1 There is no way we can cover all of that ground in this post, but we figured offering four little-known facts about the Federal Reserve could at least help readers get to know the institution a bit better. Here they are: [+] Read More

Millennial Investors and Investing Psychology

August 3, 2017

Most investors would readily admit that past experiences in the markets tend to influence their decision-making over time. At best, our mistakes can inform us what to avoid in the future. At worst, we allow certain experiences to create unproductive biases in our mindset. A good example of such a bias could be the tendency of Depression-era investors to avoid stocks altogether following that time period, given the scars left behind from such a difficult experience. The problem with such a bias, can be the creation of an even bigger opportunity cost in its wake—the opportunity cost of not participating in the gains that followed. [+] Read More

BlackRock Digs Into the Metals and Mining Rally

August 3, 2017

We see stability in commodities prices but are selective in related stocks and bonds. Industrial metals have generally outperformed their commodity peers this year, with copper prices hitting a two-year high last week. A big reason for the rally: production has been falling from last year’s levels. This is a result of firms cutting capital expenditures after multi-year price slides. Read an excerpt of Richard Turnill's weekly commentary below, or view the entire weekly investment commentary here. [+] Read More

Geneva Reviews Fixed Income and Dividend Investing

July 27, 2017

"Dividend‐ growth stocks remain more attractive than most high‐dividend‐yield stocks..." Investor and consumer confidence remained optimistic in the second quarter as capital markets continued an upward advance and volatility remained dampened. The global economy continued to gain momentum as all the world’s largest economies showed signs of growth while the U.S. consumer remained in good shape. Despite an encouraging backdrop there are some areas that continue to struggle such as traditional retail and energy, which we will continue to monitor as we construct our portfolios. [+] Read More

Announcing: WrapManager's Q3 2017 Top Equity Money Manager Picks

July 26, 2017

There are thousands of money manager strategies out there, but not every money manager is a good fit for every investor. If you’re trying to find the money managers or investment strategies that are right for you – and that could help you reach your investment goals – you might feel totally overwhelmed going through all the different options. We’d like to help clear some of the confusion for you. Each quarter WrapManager’s Investment Policy Committee (IPC) compiles a short list of money manager picks in order to help investors like you discover and evaluate different money manager strategies. These investment strategies encompass a wide range of asset classes and investment disciplines so you are introduced to as many new strategies as possible. This quarter, the WrapManager IPC has selected four strategies. [+] Read More

Main Management Reviews Market Performance in 2Q 2017

July 20, 2017

"Some Highs Despite Low and Slow Economy..." The second quarter of 2017 saw markets make new highs despite lackluster economic data. The Trump administration has seen strong market performance but has been unable to get two of its main goals coming into the inauguration – healthcare and tax reform – off the ground. This lack of action caused some hesitation in the markets, and when coupled with uninspiring economic data, has resulted in a more uncertain outlook heading into the second half of the year. [+] Read More

How “Familiarity Bias” May Impact Your Investment Decision-Making

July 18, 2017

It’s no secret that investors have a tendency to "get in their own way” when it comes to making investment decisions. As we have written before, you may not be your own best financial planner. The idea that investors often make emotional or ill-informed decisions is not an attribute that is just widely-known and accepted—there is actually an entire field of research devoted to it. This field of research is known as Behavioral Economics or Behavioral Finance, and people in the field study “inherent biases that plague individual investors.” These biases are often ones that are difficult for individual investors to come to terms with and overcome. Robert Stammers, the Director of Education for the CFA (Chartered Financial Analyst) Institute, frames the role of investor behavior on decision-making into three behavioral biases: overconfidence, familiarity, and anchoring.1 We will focus on the familiarity bias here. [+] Read More

Anticipating Inverse ETF Returns: Doug’s Quiz Corner

July 18, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug teaches a lesson on antcipating inverse ETF returns. Consider this Scenario: Your friend Gary is feeling bearish on the stock market so he purchased $10,000 of an inverse ETF. The inverse ETF he purchased aims to return the opposite of the daily return of the S&P 500 (for example, if the S&P 500 goes down 1% on a given day, the inverse ETF should go up 1% on that day). There are several reasons why an inverse ETF may not be exactly the inverse of the index on a given day (expense ratio of the ETF, tracking error, trading costs, etc.) but for the purposes of this example, assume that Gary’s inverse ETF returns exactly the inverse of the daily returns of the S&P 500. [+] Read More

12 Ways to Define the Investment Goals that Matter to You

July 13, 2017

Being a prudent saver and a savvy investor can help you accumulate the assets you need for retirement. In some cases, that can mean a formula as simple as saving 20% of all your lifetime earnings and hiring a trusted adviser to build you a diversified investment portfolio. But for those who want to take the planning process a step further, it can be beneficial to define the investment goals that matter to you. This exercise can provide you clarity to answer not the question of how to save and where to save, but why to save. [+] Read More

Federated Investors Hopeful About Stocks’ Summer Doldrums

July 13, 2017

While extremely low headline volatility of late may be putting some investors to sleep, beneath the surface, there has been a healthy and ongoing rotation among market sectors that should continue into the fall, pulling the S&P 500 ever higher toward our near-term 2,500 and long-term 3,000 targets. The reasons are three-fold: the economic backdrop is still solid; credit and liquidity conditions remain good; and politics and the Fed appear set to work together and revive the “Trump trade” in coming months. So stay long stocks. Add to industrials, financials and health care. And don’t abandon tech yet—there’s more to come in the next 12 months. Continue reading for additional insights: [+] Read More

Plan Now for Education Later: 529 College Savings Plans

June 29, 2017

With the cost of education continuing to rise, and the requirements for minimum workforce entry showing no likelihood of decreasing the importance of a post-secondary education, it’s more important than ever that college costs are considered and incorporated into your budget as early as possible. For all the readers who have children, grandchildren, nieces and nephews who are a constant source of excitement and joy, making sure these children get a world-class education is of paramount importance. But paying for college is a completely different ballgame. [+] Read More

BlackRock Examines Momentum Trading in 2017

June 29, 2017

We like momentum in today’s economic environment, even if its performance could be prone to short-lived reversals. The momentum style factor — stocks that are trending higher in price — has been on a tear in 2017. Sustained above-trend economic growth and solid earnings prospects could help extend the gains, but it may be a bumpy ride. Momentum has historically outrun the broader market, but with periodic sharp drops. The biggest dips in its relative performance have coincided with recessions and financial crises. Our research shows momentum tends to perform best during steady economic expansions — and we see this cycle having ample room to run. Read the three key points of BlackRock's weekly commentary below, or view the entire three-page weekly investment commentary now. [+] Read More

What is Probate? Why & How to Avoid It

June 22, 2017

Back in mid-May, I wrote an estate planning article about the late artist and global music phenomenon, Prince. The objective of the piece, amongst other things, was to bring to light the problems, expenses, and hardships that can result when a high net worth individual does not adequately prepare an estate plan. In Prince’s case, he did not even have a last will. What followed in Prince’s case was nothing short of troubling. More than 45 people came forward to the court claiming to be related to Prince as a spouse, child, sibling, or some other relative. Prince’s estate then spent over a year in probate court, and at the end of the day it has been reported that his $200 million estate is expected to be cut in half by federal and estate taxes. Can you imagine paying $100 million in taxes? It’s unfathomable! In all likelihood, this outcome could have largely been avoided with some sound financial and legal advice during Prince’s lifetime. [+] Read More

Nuveen Decodes Mixed Economic Signals

June 22, 2017

Economic Data and Confidence Levels Offer Mixed Signals In recent months, we have seen increased softness in so-called “hard” economic data, including retail sales, automotive production and employment. At the same time, “soft” data such as business confidence measures point to an expectation of economic acceleration. In our experience, these disconnects typically result in a move in the soft data, suggesting confidence measures could be due for a setback. Should this happen, it could provide a headwind for equity prices. Key Points: Economic data has trailed off in recent weeks, but we see reasons to expect a renewed acceleration. In the near-term, confidence levels could diminish, providing a headwind for stocks. Nevertheless, we believe it makes sense to maintain a pro-growth investment stance. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF . [+] Read More

Which is Less Volatile, Stocks or Bonds? Doug's Quiz Corner

June 20, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug explores portfolio volatility. Consider this Scenario: Your friend Margaret has recently inherited some money and is considering how to invest it. Her current portfolio is invested exclusively in long term US Government bonds. She is leaning toward investing the inheritance in more long-term US Government bonds, but her friend Tiffany has suggested that Margaret invest this inheritance in a diversified portfolio of stocks instead of buying more bonds. The inheritance will make up 10% of her total portfolio. Margaret isn’t so sure and she tells Tiffany, “I’m not comfortable with volatility in my portfolio. I want to have as little volatility as possible. So I’m leaning toward just adding more long-term US Government bonds since bonds typically have less volatility than stocks.” If her goal is to have as little volatility as possible in her portfolio – which investment option for the addition, is most likely to achieve Margaret’s goal: 1) more long-term US Government bonds of the same duration as her existing holidngs or 2) a diversified portfolio of stocks? [+] Read More

JP Morgan Evaluates Implications of an Interest Rate Hike

June 15, 2017

After a brutal recession and a painfully slow recovery, the U.S. economy no longer needs emergency measures of support from the U.S. Federal Reserve. Policymakers began the process of normalizing monetary policy at the end of 2015, and although the Fed is raising rates because the economy is healthier, the prospect of higher interest rates has created consternation and angst among some investors. While the Fed’s own projections are for a slow and gradual rate hike cycle, futures pricing suggests that the market thinks interetst rate hikes may be a bit slower. Although the gap between the Fed’s projections and the market’s view has narrowed, there is still room for surprises and volatility. The key thing to watch will be how market expectations adjust to the Fed’s new forecasts, as a Fed that hikes more quickly than the market expects could lead to upward pressure on the U.S. dollar and a de facto tightening for the U.S. economy. Read the entire commentary here. [+] Read More

When it Comes to Retirement Planning, What’s the Difference Between Needs and Wants?

June 14, 2017

Retirement planning involves more than just saving money in a 401(k) or putting away cash in IRAs here and there. An investor has to consider many other factors: living expenses and cash flow needs throughout one’s lifetime (as well as a spouse’s lifetime, if applicable), health care spending and how that can change over time, Social Security timing decisions, estate planning, and tax strategies. It can be a lot of work. When it comes to planning for living expenses and cash flow needs (spending), one beneficial exercise can be to categorize your assets/goals into 'needs,' 'wants,' and 'legacy' items. The next step would be to think about how your retirement plan can be used to fund each category, starting with your needs first. [+] Read More

BlackRock Evaluates Emerging Markets and European Equities

June 8, 2017

When contrarian becomes consensus... Many investors have flocked to emerging market (EM) and European equities this year, as money has broadly flowed back into risk assets. Our analysis suggests these equity trades are becoming consensus, and EM and European stocks are no longer the contrarian trades that they were for much of 2016. Read the three key points of BlackRock's weekly commentary below, or view the entire four-page weekly investment commentary now. [+] Read More

Chasing Heat? You May Get Burned.

June 7, 2017

The Information Technology sector has been on a roll so far in 2017. The returns for the sector year-to-date are nothing short of eye-opening: as of May 30, Information Technology has returned just over 20%, which puts it fairly far ahead of the next best performer, Consumer Discretionary (+11.52%). By comparison, the broad S&P 500 index is up a much lesser +7.7%, which while strong is still pretty modest compared to technology’s run.1 This strong performance has some investors scrambling to beef-up their investment portfolio’s technology holdings, in an effort to ‘join the party’ so to speak. But investors should take pause before rushing to buy more technology stocks. Doing so would essentially mean “chasing heat,” which is just another version of market timing– a tactic that is not necessarily advisable for the long-term investor. [+] Read More

Nuveen Evaluates Investor Skepticism

June 1, 2017

Global Equity Prices Should Trend Unevenly Higher Many investors remain uneasy about the global macro backdrop, despite accelerating global economic growth, low inflation, accommodative global monetary policy and solid corporate earnings. Concerns about possible recession and deflation remain, and many investors are continuing a flight to quality, which is causing global bond yields to remain at exceptionally low levels. At the same time, disappointing U.S. economic data and mounting concerns over political instability in Washington, D.C. have held back equity prices and the value of the U.S. dollar. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

The 4-Step Action Plan if You’re Worried About Your Investment Portfolio

May 31, 2017

It is an interesting time in the United States’ sociopolitical sphere, to say the least. But lucky for you, this article isn’t about politics, a social movement, or anything in the news for that matter. It is about what to do if you start to get worried about how the equities and/or bond markets may react to ongoing developments and potential controversies. In the current environment, it is the uncertainty that has many investors on edge. For some, every day may feel like it has the potential for some breaking story that sinks markets. To help address any concern investors may have, we present a 4-step action plan for what to do when you’re worried about your investment portfolio. [+] Read More

Cambiar Investors Reflects on 1st Quarter 2017

May 25, 2017

The year 2016 marked the first year since the Global Financial Crisis (GFC) of 2008-09 when value investing decisively beat growth investing as a category, with value-style returns exceeding growth style returns by roughly 10 percentage points in most capitalization categories last year. Value stock indices are heavily populated by financial companies, which tend to be very sensitive to interest rate trends. Unsurprisingly, financials, bond yields, and value stocks as a category leapt forward in sync following U.S. elections, and subsequently lagged in relative performance terms when the upward momentum in bond yields topped out in early January, perhaps reassessing how much real change can be wrought. Whether or not value stocks truly “over-performed” in late 2016 or just needed to consolidate gains remains to be seen, but the change in market conditions in the first quarter suggests at least one of these narratives is true. Right around the Trump inauguration in January, market conditions flipped, and big cap growth stocks (which had lagged in late 2016) went on a tear while value names did little. The flip back from value to growth was most pronounced in small caps (growth benchmarks up over 5%, value indices down fractionally); that said, growth issues outpaced their value counterparts by a factor of 1.5x to 2.0x in most broader indexes. [+] Read More

Investor Psychology: Why You May Not Be Your Own Best Financial Planner

May 24, 2017

Dr. Meir Statman is a professor of finance (with a focus on behavioral finance) at Santa Clara University. You might say he is a foremost expert on how emotions can affect financial decision-making for managers and investors. His most recent book, “Finance for Normal People: How Investors and Markets Behave,” is pretty much a dead giveaway for where his life’s work is focused. So, when Dr. Statman pens an article in the Wall St. Journal titled, “How Emotions Get in the Way of Smart Investing,” it is probably worth a close look. Indeed, the relationship between human emotions and investing is a complicated one – and it’s one that many experts would agree is at odds. Few would disagree with this general idea: investors who can remove emotion from the investing equation have a better chance of doing well over time versus those who cannot. As Warren Buffet succinctly puts it, “it’s an easy game if you can control your emotions.” [+] Read More

JP Morgan Considers Inflation's Next Phase

May 18, 2017

Around the globe, a synchronized upturn in nominal growth is underway, including an upturn in inflation. Global monetary policy is responding in kind. The Federal Reserve (Fed) is increasingly confident that inflation will hit its target rate and has begun accelerating its cautious rate-tightening cycle; the pendulum is gradually swinging toward tightening at other developed market (DM) central banks. The investing community’s perception of inflation risk has swung during the current expansion from fear of an inflationary surge after the Great Recession to fear of global deflation when oil prices collapsed and, since last year, back to a reflation theme, again accompanied by worries that some economies, particularly the U.S., could overshoot their central banks’ targets. By contrast, throughout these periods, inflation itself (at least excluding volatile energy and food prices) has displayed surprising stability. How far will reflation go in the U.S. and other developed market economies? How can we forecast inflation? Read the entire market commentary here. [+] Read More

Leaving a Legacy That Spans Generations

May 16, 2017

When most people think of the late artist Prince, they think about a global music phenomenon with unforgettable pop hits and an unforgettable persona. That’s how he should be remembered. But what many people do not realize is that Prince’s fortune – the estate he worked tirelessly to create over time – is currently being battled out in the courts amongst a slew of relatives, “alleged heirs,” lawyers and advisors. Prince passed away over a year ago (April 21, 2016), yet his estate is still very much unsettled.1 The reason for the ongoing court battles and legal headaches? Prince didn’t have a will. [+] Read More

Is it Better to Fund College Expenses from a Taxable Joint Account or an IRA? - Doug's Quiz Corner

May 16, 2017

Quizmaster Doug Hutchinson presents his monthly wealth management test. This month he quizzes your knowledge on whether it’s better to pay for college expenses from a taxable joint account or an IRA. Consider this Scenario: Your friends Rick and Andrea have a granddaughter, Alexis, who is getting close to college age. Rick and Andrea would like to help out with college expenses and they are considering two options to fund a tax deferred investment account for Alexis' college expenses. [+] Read More

JP Morgan Shares Their Guide to the Markets for 2Q 2017

May 11, 2017

JP Morgan Quarterly Guide to the Markets JP Morgan’s Guide to the Markets for the second quarter of 2017 is now available. The comprehensive guide includes pages of charts illustrating: Returns and valuations by style and by sector Fixed income yields and returns Annual returns and intra-year declines of the S&P 500 [+] Read More

When the Stock Market Gets Volatile, Smart Investors Do This

May 10, 2017

There’s a popular saying that people often use to characterize or describe human behavior: “we are our own worst enemies.” This phrase probably wasn’t created with the original intent of describing investor behavior, but one thing’s for sure—it often hits the nail on the head. You have probably read before that investors’ emotions often get in the way of sound long-term decision making. During times of pronounced market volatility or downturns, investors often get worried (understandably) about sustaining too many losses, and they will alter their long-term strategy as a result. In other words, experiencing declines in the market often leads to the feeling of needing to “do something to stop the losses,” which means making knee-jerk reactions. Research shows, however, that those knee-jerk reactions can cost investors quite a bit over the long-term. [+] Read More

Brandes Reviews the Q2 2017 Opportunities in International Equities

May 4, 2017

Is your portfolio well-positioned to take advantage of international opportunities? Brandes Investment Partners believes there are compelling reasons why now is the time to cast a longer look at international equities. Including: Access to more opportunities Diversification potential Return reversion potential [+] Read More

Newfound Research Wins Award for Best ETF Strategist from ETF.com

May 3, 2017

Congratulations to Newfound Research for winning the 2016 award for Best ETF Strategist with their QuBe portfolios. Editor’s Note: WrapManager does not provide direct investment access to the QuBe portfolios. WrapManager provides investment access to several other Newfound products, including the Risk Managed Sector Series. After the announcement of the winners of the 2016 ETF.com awards WrapManager spoke with Newfound Research about their place in the rankings. Answers were provided by Justin Sibears the Portfolio Manager at Newfound. A frequent speaker on industry panels and contributor to ETF Trends, Justin holds a Master of Science in Computational Finance and a Master of Business Administration from Carnegie Mellon University as a well as a BBA in Mathematics and Finance from the University of Notre Dame. [+] Read More

Common Financial Credentials: What is a CFP, CWS, and CFA?

May 2, 2017

Once you’ve realized that hiring a financial advisor is worth it, the next step is choosing the right one for you. When you began your search you may have noticed that there is a wide variety of different acronyms that come after their name. For investors of all types, the alphabet soup of financial credentials can be confusing, especially if you’re searching for a wealth manager or financial advisor with a particular skill set. Read on to learn about the difference between a Certified Financial Planner®, a Certified Wealth Strategist®, and a Chartered Financial Analyst®. [+] Read More

JP Morgan Sees Potential in Europe, Emerging Markets

April 27, 2017

In the first quarter of 2016, investors feared that weak conditions in many emerging markets, commodities and global manufacturing would deteriorate into a full blown recession across the developed world and China. As stock markets struggled, equity investors overwhelmingly preferred defensive stocks and gave an unusually generous discount to companies vulnerable to weak economic activity and low interest rates. But the recession never arrived. Reduced fiscal austerity and continued easy monetary policy, coupled with greater confidence in the industrial sector and increased bank lending, have reignited global growth. Commodity prices have rallied, and the outlook for corporate profits now appears better than it has in several years. Though equity markets have moved quickly to price in the welcomed shift, we still see opportunities, especially outside the U.S., after many years of substantial returns for the S&P 500. Read the entire market commentary here. [+] Read More

3 New Money Manager Strategies to Consider for 2nd Quarter 2017

April 26, 2017

The WrapManager Top Equity Money Manager Picks Report for second quarter 2017 includes three different money managers with diverse strategies. As we do every quarter, the WrapManager Investment Policy Committee (IPC) has selected three money manager strategies to highlight as an opportunity for you to learn about money managers that you may not be familiar with, as well strategy types that may be of interest to you. This quarter, the IPC has selected three strategies to highlight, including: A concentrated growth approach seeking to invest in market leading companies. A small cap equity strategy that focuses on stock selection. A mid cap value portfolio that seeks to invest in companies with favorable valuations. [+] Read More

BlackRock Releases 2Q 2017 Global Investing Outlook

April 20, 2017

Global growth expectations are on the rise, and we see room for more upside surprises... Reflation is going global. The signs include a rebound in inflation expectations, a bottoming out in core inflation and wages, and a synchronized pick-up in economic activity indicators and corporate earnings estimates. Read the key points of BlackRock's analysis below. Or, download the complete commentary (PDF). [+] Read More

Tax Efficient Giving with Appreciated Stock Donations - Doug's Quiz Corner

April 18, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug explores donating appreciated stock versus selling the stock and donating the cash. [+] Read More

What's the Difference Between a Roth and Traditional IRA?

April 18, 2017

Both a Roth IRA and Traditional IRA (Individual Retirement Account) can potentially help meet your retirement savings goals. The main difference between the two is: with a Roth IRA, taxes are paid upfront, whereas contributions to a Traditional IRA are made “pre-tax,” and reduce taxable income for the year. Age and income are two significant factors to consider when choosing a Roth or Traditional IRA. Couples or individuals in a low tax bracket as well as younger people may be better off with a Roth. Earnings grow tax-free, and contributions can be withdrawn at any time without penalty. Individuals or couples in a higher tax bracket may choose a Traditional IRA to reduce their taxable income, or because their income is too high to qualify for a Roth. A Traditional IRA is also a good choice for people who expect to be in a lower tax bracket during retirement. [+] Read More

Is Hiring A Financial Advisor Worth It?

April 12, 2017

Editor's Note: This post was originally published July 2016 and was updated in April 2017 with new information for your benefit. Investors often gauge a financial advisor’s value by measuring what’s tangible: short-term performance and financial advisor fees. However a study conducted by Benjamin Cummings of St. Joseph’s University finds there is a positive correlation between hiring a financial advisor and seeing positive impact on your net worth. The study places value on the intangible benefits a good financial advisor can provide you. Investors should not hire a financial advisor based solely on performance and fees, as doing so would overlook the positive value financial advisors can contribute through intangible benefits – acting as a sounding board for investment ideas, providing you guidance during volatile times in the market and helping you sleep at night. These benefits are valuable to not only your financial health, but also your personal health. [+] Read More

Nuveen Believes the Political Backdrop Can Support Growth

April 12, 2017

Economic Growth, Not Politics, Is Probably the Biggest Risk For some time, we have argued that equities and other risk assets looked overextended following their strong run-up since the election. In recent weeks, equities have been trading sideways and government bond prices have recovered. More than politics, the economy probably presents a more probable roadblock for equities. We think economic sentiment may be too high and elevated confidence may make investors vulnerable to downside economic surprises. To be sure, we are not expecting a significant economic slowdown, but the nearly non-stop pace of positive economic data is unlikely to continue. At some point, a setback will likely be triggered by a manufacturing decline, soft oil prices, weakening data from China or some other factor, which could spark a risk-off phase. Nevertheless, we remain constructive in the medium and long-term toward risk assets, but are growing increasingly cautious about the short-term outlook. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

Nuveen Observes Equities Sag as Political Optimism Returns to Earth

April 5, 2017

Where Can Investors Find Value in These Markets? Stocks experienced their largest one-week decline since the election, as the S&P 500 Index fell 1.4%.1 Most losses occurred on Tuesday when it became clear that the Republican health care plan was facing trouble, signaling that President Trump’s pro-growth economic agenda could falter. Small cap stocks, financials and industrials fared the worst last week, with utilities and REITs gaining ground. Treasury prices rallied for a second straight week, while the U.S. dollar fell for the third week. Read an excerpt of the complete commentary below, or download the entire investment commentary as a PDF. [+] Read More

What is ESG Investing and Does It Make Financial Sense?

April 4, 2017

Corporations in America are aware that public perception is important. That’s why many companies have made strides in recent years to emphasize their efforts in caring for the environment, providing equal opportunities to employees, and being active contributors to small communities. It’s PR 101 for building trust and goodwill towards a brand, which can ultimately help drive sales. [+] Read More

How Will Rising Interest Rates Affect Your Investment Portfolio?

March 30, 2017

On March 15, the Federal Reserve raised interest rates for the first time in 2017. Federal Reserve Chairman Janet Yellen moved the benchmark interest rate a quarter percentage point higher, to a range of 0.75% to 1%, and the Fed indicated that the market could expect two more rate increases this year.1 So what does this all mean for you? The answer depends on whether you look at it from a standpoint of being a borrower, a saver, or an investor. Later in this post, we’ll take a look at all three scenarios. But first, here’s a bit of background as to what an interest rate increase actually is, and why they occur. [+] Read More

Lord Abbett: Why HSAs Matter More Than Ever

March 29, 2017

Many experts expect healthcare costs will continue to rise, making it important that advisors help their clients plan ahead. According to the Kaiser Family Foundation, health care has become somewhat less affordable, even among those with health insurance. Since 2015, larger shares of people with health insurance say they have a difficult time affording their healthcare costs: from 27% to 37% for premiums; 34% to 43% for deductibles; and from 24% to 31% for copays and prescription drugs. Some experts estimate that a 65-year-old couple who retired in 2016 will need $260,000 to cover just healthcare costs in their golden years—6% more than the previous year's estimate of $245,000. That’s the highest estimate since such projections started in 2002, and chances are repealing and replacing the Affordable Care Act, not to mention the high cost of pharmaceuticals, could push retiree healthcare costs even higher. All of which highlights the need for advisors to discuss with clients the flexibility and power of Health Savings Accounts (HSAs). Read on for a summary of their analysis, or view the entire document here. [+] Read More

The Retirement Dilemma for High Income Earners

March 28, 2017

High income earners often find themselves in a bit of a quandary when it comes to retirement planning. Individuals making over $132,000 and married couples making over $194,000 are not eligible to contribute to a Roth IRA.1 For 401(k)s, the annual contribution limit of $18,000 ($24,000 for those over 50)2 is simply not enough for someone who made, say, $250,000 per year during their working years. Saving $18,000 a year is probably not sufficient for someone at that income level to maintain the same standard of living in retirement. Of course, this does not mean that high income earners should shy away from contributing to 401(k)s or other employer-sponsored retirement plans. The more a person can contribute to a tax-deferred plan, the better. But for high income earners, saving enough so that you can replace your income in retirement means turning to other methods and savings vehicles to reach your goals. Here are three potential options. [+] Read More

What is a Good Strategic Value Dividend Strategy Under Trump? - Federated Investors

March 21, 2017

Our first and primary answer to the client question of what one can expect from investment in a Strategic Value Dividend product is the opportunity for a high and rising income stream from high-quality business assets. For our more stock market-oriented clients, our answer is that we have historically delivered broad market returns, plus or minus, depending on the measurement period, but with a notably lower standard deviation. Both of those propositions were in effect prior to the US Presidential election; both remain in effect today. That being said, the world is now quite different than it was on November 8. How has this reality affected our companies? In short, not much, but let’s review some of the possible “talking points” involving the new administration’s policies. Keep in mind that all of these proposals are, for now, just media speculation and Sunday talk show fodder. But let’s tally up the potential pros and cons. [+] Read More

Savings Checkpoint! How to Know if You’re Saving Enough

March 15, 2017

Retirement and financial planning can essentially be broken down into three phases: Saving Investment Distribution (Retirement Income) For many people, that means spending our working years making an income to provide for our families and to save for retirement. We then invest our savings in hopes of achieving a rate of return over time, to grow the assets and provide for our retirement. And finally, we devise strategies to generate retirement income from our savings. [+] Read More

JP Morgan: The Importance of Immigration

March 14, 2017

In the early days of the new administration, no issue has been more controversial than immigration. The president’s statements on building a wall on the U.S.'s southern border, his actions on banning travel from specific countries and his heightened focus on deporting illegal aliens have generated a negative response from his opponents and a positive reaction from some of his supporters. As with our entire 100 days of change series, we will try to steer clear of political arguments. Policies in this area do have significant implications for both the economy and, ultimately, financial markets. So what actions has the president taken and advocated, how might these affect both illegal and legal immigration and what could this mean for growth, inflation and investment returns? Read the entire market commentary here. [+] Read More

Retiring in America: 3 Practical Tips to Help Set Your Course

March 13, 2017

Retirement planning in America is no simple task. Whether it’s navigating the ever-shifting tax code, factoring-in the rising cost of healthcare, or devising income strategies from various sources like Social Security and retirement investment accounts, investors have many decisions to make and potential strategies to pursue. So, amidst the many complexities involved with retirement planning, it’s useful to take a step back and think about retirement planning in simpler terms. In other words, start with a basic framework first, and then grind down into the details from there. Here are 3 practical tips for setting a solid course for your retirement. [+] Read More

Do You Have to Pay Capital Gains Tax on Mutual Funds? - Doug's Quiz Corner

March 10, 2017

Quizmaster, Doug Hutchinson, presents his quiz for the month. Here, Doug explores how to manage capital gains tax on mutual funds. Consider this Scenario: Your friend Joe is preparing his tax returns and is confused as to why he owes taxes on a mutual fund position that he hasn’t sold and went down in value from the purchase price. "I bought $100,000 worth of a mutual fund on October 1st at $10.00 per share in a taxable brokerage account. On December 1st I received a capital gains distribution from the mutual fund. At the end of the year the mutual fund was worth $9.90 per share." "I didn't sell any shares of the mutual fund after I bought them and the price per share has gone down in value since I bought the mutual fund. Why would I owe taxes in this scenario?" What is a potential reason why Joe would owe taxes in this scenario? [+] Read More

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