Economic Updates & Financial Articles

Economic Updates & Financial Articles

Economic Updates:

Retirement in Sight Newsletter:

Financial Articles:

 


Weekly Economic Update for 9/14/2020

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THE WEEK ON WALL STREET

Stocks traveled a volatile path last week as investors appeared concerned about the upcoming elections, an uncertain economy, and more delays with additional fiscal stimulus.

The Dow Jones Industrial Average slid 1.66%, while the Standard & Poor’s 500 slumped 2.51%. The Nasdaq Composite index plummeted 4.06% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.44%.1,2,3

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Football Is Back

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Football is back, which means Summer is coming to a close, days will get shorter, and sweaters will soon be in play.

This year, there was no pre-season, so professional football started in September, which coincidentally, is a perennial month for stock market volatility.1

Football follows Major League Baseball, the National Basketball Association, and the National Hockey League, in which each organization started seasons (some abbreviated) in the past few months. Some colleges are playing fall sports, while others have postponed a part of their seasons.

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Weekly Economic Update for 9/7/2020

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THE WEEK ON WALL STREET

A late week sell-off sent stocks broadly lower as investors took some profits after stocks reached all-time highs earlier in the week.

The Dow Jones Industrial Average slid 1.82%, while the Standard & Poor’s 500 slumped 2.31%. The Nasdaq Composite index dropped 3.27% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 0.62%.1-3

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When the Fed Talks Inflation, Bond Investors Listen

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Most recently, you may have read that Federal Reserve Chair Jerome Powell announced a change in how the Fed views inflation. In the past, the Fed said it would consider adjusting short-term rates when inflation approached 2 percent. But in light of 2020’s many challenges, the Fed’s new policy may allow inflation to run above 2 percent for a period of time before any shift in monetary policy is considered.1

For many, bonds are a critical component of their overall investment strategy. So any change in Fed policy regarding inflation may influence a portfolio. That's why It’s so important to understand that the market value of a bond will fluctuate with changes in interest rates. In other words, when interest rates rise, the value of existing bonds will typically fall.2

There’s no doubt this will be a subtle change for many. But for bond investors, the policy shift may indicate that the Fed has given itself more flexibility in the future.

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Dow 30 Changes Its Starting Lineup

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The Dow Jones Industrial Average (DJIA), one of the most widely followed stock market indices, has made some key changes to its starting lineup.

Salesforce.com, Amgen Inc., and Honeywell International Inc. have replaced Exxon Mobil Corp., Pfizer Inc., and Raytheon Technologies Corp. The change went into effect before the market opened on Monday, August 31.1

It’s important for investors to know that the changes took effect so they have a better understanding of the financial markets. But it’s also important to note that the DJIA has made several adjustments since it was first published in 1896, so a change to the Dow 30 lineup is nothing new.2

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Monthly Economic Update for September, 2020

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U.S. Markets

Stock prices surged in August as investors cheered positive news of a potential COVID-19 treatment and welcomed a month-long succession of upbeat economic data.

The Dow Jones Industrial Average rose 7.57 percent, the Standard & Poor’s 500 Index climbed 7.01 percent, and the Nasdaq Composite soared 9.59 percent.1

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Weekly Economic Update for 8/31/2020

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THE WEEK ON WALL STREET

Stocks advanced relentlessly last week on positive COVID-19 developments, encouraging economic data, and a supportive policy shift in the Fed’s approach to its target inflation rate.

The Dow Jones Industrial Average increased by 2.59%, while the Standard & Poor’s 500 jumped 3.26%. The Nasdaq Composite index leaped 3.39% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, rose 1.19%.1-3

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Home Builders Confident In Economic Rebound

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To some, this may hardly feel like an economy headed for a bright future. But don’t tell that to home builders.

Builder confidence in August jumped to an eye-popping 78 in August, according to the Housing Market Index courtesy of the National Association of Home Builders. To put that number in perspective, anything over 50 is considered positive.1

This past April, builder confidence plunged to 30 as the pandemic swept the nation. In August, the index hit the highest level in the 35-year history of the monthly series and matches the record set in December 1998.1

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Conquering Retirement Challenges for Women

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When it comes to retirement, some women face obstacles that can make saving for retirement a challenge. Women typically earn less than their male counterparts and often take time out of the workforce to care for children or other family members. Added to the fact that women typically live longer than men, retirement money for women may need to stretch even further.1

Despite these challenges, there are a lot of reasons to be hopeful.2

Review your existing situation. Do you want to spend your years traveling together, or do you envision staying closer to home? Are you seeing yourself moving to a retirement community, or do you want to live as independently as you can? Sit down with your spouse, if you’re married, to discuss your visions for retirement.

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Has the Stock Market Rally Left You Behind?

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Some people in recent weeks may have been feeling that “the stock market seems to be doing so well but I’m not participating.”

A look behind the headlines helps tell the story.

A CNBC study found that between the stock market high on February 19, 2020—and the new market high on August 18, 2020—only 38 percent of stocks in the Standard & Poor’s 500 index posted gains. By contrast, 62 percent showed losses.1

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Weekly Economic Update for 8/24/2020

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THE WEEK ON WALL STREET

Stocks powered to another week of gains as the S&P 500 and Nasdaq Composite set multiple new record highs along the way.

The Dow Jones Industrial Average was essentially unchanged while the Standard & Poor’s 500 rose by 0.72%. The Nasdaq Composite index added 2.65% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.71%.1,2,3

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How Much Do You Really Know About Extended Care?

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How much does eldercare cost, and how do you arrange it when it is needed? The average person might have difficulty answering those two questions, for the answers are not widely known. For clarification, here are some facts to dispel some myths.

True or false: Medicare will pay for your mom or dad’s nursing home care.

FALSE. Medicare is not extended care insurance.1

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Why Medicare Should Be Part of Your Retirement Planning

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Medicare takes a little time to understand. As you approach age 65, familiarize yourself with its coverage options, costs, and limitations. 

Certain features of Medicare can affect health care costs and coverage. Some retirees may do okay with original Medicare (Parts A and B), others might find it lacking and decide to supplement original Medicare with Part C, Part D, or Medigap coverage. In some cases, that may mean paying more for health care than you initially figured.

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Why Roth IRA Conversions May Now Be Advantageous

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Roth IRAs have attracted retirement savers since their introduction in 1998. They offer the potential for tax-free retirement income, provided Internal Revenue Service rules are followed.

Do Roth IRAs seem even more attractive these days? Perhaps. You can cite two factors: current tax rates and the passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act. 

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Is Inflation On The Rise?

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Right now, many Americans are worried about their financial health due to the impact COVID-19 has had on the country. Adding to these concerns were July's consumer prices— excluding food and energy—which rose at the highest rate in nearly 30 years. However, this jump may not be as scary as it looks on the surface.

We’ll get a better idea about the trend on inflation when the Consumer Price Index for August 2020 is released on Friday, September 11. But here are some factors to keep in mind.1

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Get Your FAFSA Ready

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Mark this date on your calendar: October 1. That is the day when current and future traditional college students can start submitting the Free Application for Federal Student Aid (FAFSA) for the 2021-22 school year. For many students, the FAFSA is frequently the gateway to significant financial aid: federal and state student loans, grants, university scholarships, and work-study programs.1

FAFSAs should be sent in as soon as possible. The closer to “opening day” (October 1) you can do it, the better. Some states offer aid on a first-come, first-serve basis, and some universities set fall deadlines for financial aid requests.1,2

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Taxable Events in Retirement Accounts

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When you distribute, sell, or receive assets from a retirement account, taxes usually follow. It is true for individuals; it is true for trusts. These decisions represent taxable events.

Many retirement accounts are tax-deferred, but not tax-exempt. So, at some point, a “day of reckoning” arrives for these accounts, and taxes are due. The tax liability may differ greatly, depending on account ownership.

Trust income is now taxed much more than individual income. This is a result of the Tax Cuts and Jobs Act of 2017.1

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Why Regular Rebalancing Makes Sense

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Everyone loves a winner. If an investment is successful, most people naturally want to stick with it. But is that the best approach?

It may sound counterintuitive, but it may be possible to have too much of a good thing. Over time, the performance of different investments can shift a portfolio’s intent – and its risk profile. It’s a phenomenon sometimes referred to as “risk creep,” and it happens when a portfolio has its risk profile shift over time.

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What Are Stock Splits?

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Two high-profile companies—Apple and Tesla—have announced stock splits in the past few weeks, which makes it a great time to discuss what’s involved when a company announces a stock split.

Remember, any companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Any investment should be consistent with your objectives, timeframe, and risk tolerance.

The Securities and Exchange Commission says, “Companies often split shares of their stock to try to make them more affordable to individual investors. Unlike an issuance of new shares, a stock split does not dilute the ownership interests of existing shareholders.”1

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Weekly Economic Update for 8/17/2020

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THE WEEK ON WALL STREET

Stock prices drifted higher in an otherwise quiet news week, as a slowdown in new COVID-19 cases outweighed a Congressional impasse on a new fiscal spending measure.

The Dow Jones Industrial Average gained 1.81%, while the Standard & Poor’s 500 rose by 0.64%. The Nasdaq Composite Index inched 0.08% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, advanced 3.11%.1,2,3

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The Fed’s Year-Long Review Expected in September

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As many of you know, the Federal Reserve's Open Market Committee has eight scheduled meetings each year when the seven board members review the nation's economic activity and set the federal funds rate's target rate.

In this extraordinary year, the Fed may announce in September the results of its year-long policy review. The Fed's focus has been where Americans might expect: examining inflation and employment as the nation recovers from the volatility that followed COVID-19.1,2

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Federal Student Loan Relief

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This month, many universities and colleges are welcoming students back to campus, even if most campuses are largely online this year.

But that's not all that's different. The current administration has issued an executive memorandum that extends the temporary halt on all federal student loan payments, which was originally granted by the CARES Act, until December 31, 2020. This executive action instructs the Department of Education to “continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education.”1

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How Much Money Will You Need for Retirement?

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"Will I outlive my retirement money?" That's one of the top fears for people who are starting to prepare for their retirement years.

So I have to chuckle a bit when I see headlines that say, "Here's how much money Americans think they need to retire comfortably."1

$1.9 million is the number, according to a nationwide survey of 1,000 employed 401(k) participants by a well-known financial services company. In 2019, the same survey reported the number was $1.7 million. But this year's pandemic increased the total by $200,000.2

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The Taxation of Restricted Stock Units

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Is your employer giving you restricted stock units (RSUs)? Here are some details about RSUs, which differ from stock options in both their nature and taxation. 

Remember that this article is for illustrative purposes only and not a replacement for real-life advice. Please contact a tax, legal, or accounting professional before implementing a strategy or modifying an existing strategy involving restricted stock units.

RSUs are not yet shares of stock. They are a perk for your loyalty or job performance, and basically, a promise from your employer. The promise is this: at some point in the future, the company will deliver one share of stock to you for every RSU in your name. The delivery of RSUs usually happens in phases, across a few years.1

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A Checklist for When a Spouse or Parent Passes

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When you lose a spouse, partner, or parent, the grief can be overwhelming. In the midst of that grief, life goes on. There are arrangements to be made, things to be taken care of – and in recognition of this reality, here is a checklist that you may find useful at such a time.

First, gather documents. Ask for help from other family members if you need it. Start by gathering the following. 

* A will, a trust, or other estate documents. If none of these exist, you could face a longer legal process when settling the person’s estate. If a trust exists, consider contacting the professional or firm who helped set up the document.

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The 2020 RMD Income Tax Relief Deadline is Almost Here

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Are you one of the many retirement account holders who took a mandatory distribution this year? If so, you may be able to manage the taxes associated with Required Minimum Distributions (RMDs) from traditional IRAs and 401(k)s. There are some essential details to keep in mind, however. Here’s what you need to know.

Don’t forget the withholding. Thanks to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, those who hold certain retirement accounts can bypass the required minimum distributions for 2020. To do so, though, you’ll need to return the full amount of your RMD to your retirement account. Keep in mind, many retirement account custodians often withhold income tax, which will need to be returned as well—not just the net amount you receive.1

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Weekly Economic Update for 8/10/2020

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THE WEEK ON WALL STREET

Overlooking stalled efforts by Congress to pass a new fiscal stimulus bill, stocks marched higher last week with the Dow Jones Industrials leading the way and the NASDAQ Composite setting multiple fresh record highs.

The Dow Jones Industrial Average gained 3.80%, while the Standard & Poor’s 500 rose by 2.45%. The Nasdaq Composite index climbed 2.47% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.31%.1-3

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Financial Strategies for Young Families

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The hardest part is getting started. Even though more than half of U.S. households have some form of investment in the stock market, many new parents may still find that creating a financial strategy is the last thing on their minds. And who can blame them? After all, new parents have a million concerns to keep in mind on top of any unexpected financial pressure that may arise. But for young families with discretionary income, creating a financial strategy may be easier than they realize.1

Remember that investing involves risk, and the return and principal value of investments will fluctuate as market conditions change. Investment opportunities should take into consideration your goals, time horizon, and risk tolerance. When sold, investments may be worth more or less than their original cost. Past performance does not guarantee future results.

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The A, B, C, and D of Medicare

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Whether your 65th birthday is on the horizon or decades away, understanding the different parts of Medicare is critical, as this government-sponsored program may play a role in your future health care decisions.

Parts A & B: Original Medicare. There are two components. In general, Part A covers inpatient hospital care, skilled nursing facility costs, hospice, lab tests, surgery, and some home health care services. One thing to keep in mind is that, while very few beneficiaries must pay Part A premiums out of pocket, annually adjusted standard deductibles still apply.1,2

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Strategic vs. Tactical Investing

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Ever heard the term “strategic investing”? How about “tactical investing”? At a glance, you might assume that both these phrases describe a similar investment approach. 

While each approach involves the periodic adjustment of a portfolio and holding portfolio assets in varied investment classes, they differ in one key respect. Strategic investing is fundamentally passive; tactical investing is fundamentally active. An old saying expresses the opinion that strategic investing is about time in the market, while tactical investing is about timing the market. There is some truth to that.1

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The Cost of Medical Care

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When uninsured people end up in the hospital, “sticker shock” can follow. Just a quick look at the current prices for medical procedures can be sobering.

How much does a CT scan cost? Between $250 to $1,500, depending on where it is performed. Need a stent in your heart? The average cost of that delicate procedure is now close to $20,000. How about a knee replacement? That surgery may run anywhere from $15,000 to $35,000.1,2

Are these the only costs associated with a hospital or outpatient visit? Not quite. Think of the cost of the room, the medications, the anesthesia. Fortunately, many Americans have health coverage, so they only have to pay a fraction of the expenses linked to these and other procedures. Those without health coverage may find themselves in financial pain.

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A Corporate Trustee Could Be a Smart Choice

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In an ideal world, managing a family trust would be simple. There would be no stress, no big learning curve, and no great time commitment involved. Unfortunately, the world is not ideal, and heirs who become trustees are often left with headaches.

“Sure,” a named trustee may think, “I can follow the rules, pay the taxes, and make sure this asset goes to this person or organization. I am confident I can deal with any issues.”

Okay, but what if the trust includes income-producing real estate, intellectual property created with collaborators, or a large investment portfolio? A trustee can quickly lose confidence when trying to understand these assets; let alone, the tax and legal issues linked to them. Additionally, the greater the complexity of the estate, the wider the door opens for family arguments about the way trust assets are being handled.

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Don’t Overreact in August

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One of my favorite Wall Street quotes is from Mark Twain, who said:

“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

But October may need to move over. During the past several years, the month of August has earned the reputation as being one of the more volatile months for stock prices.

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Weekly Economic Update for 8/10/2020

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THE WEEK ON WALL STREET

Overlooking stalled efforts by Congress to pass a new fiscal stimulus bill, stocks marched higher last week with the Dow Jones Industrials leading the way and the NASDAQ Composite setting multiple fresh record highs.

The Dow Jones Industrial Average gained 3.80%, while the Standard & Poor’s 500 rose by 2.45%. The Nasdaq Composite index climbed 2.47% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 2.31%.1-3

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Retirement In Sight for August, 2020

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FIGURING OUT WHEN TO START YOUR SECOND ACT

Many Gen Xers and baby boomers look forward to retiring on their terms. In such a circumstance, the key question becomes when to walk away from work. According to the Center for Retirement Research at Boston College, the average retirement age is now 65 for men and 63 for women.  You may retire before or after that age, depending on a few critical factors, which can vary per individual.

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Monthly Economic Update for August, 2020

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U.S. Markets

Stock prices rallied in July as further development of a COVID-19 vaccine and better-than-expected corporate financial reports encouraged investors.

The S&P 500 gained 5.5 percent, while the Nasdaq Composite picked up 6.8 percent. The Dow Industrial Average, which has lagged much of the year, rose 2.4 percent.1

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Weekly Economic Update for 8/3/2020

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THE WEEK ON WALL STREET

Stocks were mixed last week amid a busy week of earnings, some troubling economic data, and seemingly little progress on a new fiscal stimulus package.

The Dow Jones Industrial Average slipped 0.16%, while the Standard & Poor’s 500 increased by 1.73%. The Nasdaq Composite Index surged 3.69% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, dipped 0.75%.1,2,3

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Will Political Changes Affect the Economy?

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With all of the storm and stress of the year 2020, you’d be forgiven if you momentarily forgot that we’re due for another national election in November. Many states will be selecting governors, representatives, and senators, while the country itself will be voting in the presidential election.

Even though these elections happen every four years, they often breed uncertainty or anxiety about the financial markets and other investment matters. Some of our personal political beliefs may be informed by our economic worldview. For that reason, it’s natural that presidential elections are seen as potential turning points for the economy.

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Keep an Eye on Buying & Selling by Corporate Executives

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To some, the buying and selling of a company’s stock by corporate officers and directors can be an indicator of Wall Street sentiment.

In July 2020, the ratio of companies with executive buying compared with executive selling touched 0.27 – the lowest level in nearly 20 years.1

By contrast, the ratio set an 11-year high of 1.75 in March 2020.1

Corporate officers and directors are referred to as "insiders," so you'll often see this reported as "insider trading" by the financial press. But it's critical to know nothing is wrong or illegal with this type of buying and selling.

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Weekly Economic Update for 7/27/2020

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THE WEEK ON WALL STREET

Stocks slipped in the final days of trading last week on higher jobless claims and rising tensions in the U.S.-China relationship.

The Dow Jones Industrial Average lost 0.76%, while the Standard & Poor’s 500 dipped 0.28%. The Nasdaq Composite Index dropped 1.33% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, rose 1.24%.1,2,3

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Starting a Roth IRA for a Teen

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Want to give your child or grandchild a great financial start? A Roth IRA might be a choice to consider. There are many reasons why starting a Roth IRA for a teenager may be a sound financial strategy. Read on to learn more about how doing this may benefit both of you.

Tax-free benefits during retirement. Setting up a Roth IRA for the teenager in your life could prime them to have more retirement savings. Plus, a Roth IRA has the potential to accumulate over the years, and the owner may be able to better manage their tax burden if they withdraw the money after age 59½.1

For example, a 19-year-old who contributes $5,000 a year to a Roth IRA, which earns 8% for 40 years, would be positioned to have about $1.4 million by age 59. Of course, this is a hypothetical example that’s used for illustrative purposes only. It is not representative of any specific investment or combination of investments. Actual results will fluctuate.2

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The I.R.S. Has Enhanced the 2020 RMD Waivers

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In March, the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law. It was designed to help Americans impacted by the COVID-19 pandemic.1

The new law offered investors a financial break. It gave people the option to skip required minimum distributions (RMDs) from traditional Individual Retirement Accounts (IRAs) and 401(k)-style plans in 2020. (Original owners of Roth IRAs never have to take RMDs from those accounts.)2,3

Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your tax legal and accounting professionals before modifying your RMD strategy.

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Should You Consider Refinancing Your Mortgage?

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On July 16, mortgage giant Freddie Mac announced that the average interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1

A 30-year mortgage at less than 3% interest? A 15-year mortgage at less than 2.5% interest? These lows were historic milestones, unseen in the 49 years of Freddie’s weekly surveys. It’s unclear how long this low-rate environment may persist.1

Are you considering refinancing your mortgage? Keep in mind that just two summers ago, the average interest rate on a 15-year, fixed-rate mortgage hovered around 4%, while the 30-year was in the vicinity of 4.5%.2

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30-year Home Loans Fall to Historic Lows

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Lately, it can feel like each day brings a new headline about fluctuating market behavior. But amid the ups and downs of 2020, there may be some potential good news on the horizon. On July 16, 2020, the interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1,2,3

Good news for homebuyers. Keep in mind that just two summers ago, the average interest rate on a 15-year fixed-rate mortgage hovered around 4%, while the 30-year was in the vicinity of 4.5%. With the average interest rate on these loans at new historic lows, it may be a smart time for first-time buyers to consider making their move.

In other words, it's uncertain how long these historically low rates will last. Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. It’s always a good idea to consult with your tax, legal, and accounting professionals before considering any changes to your living situation.

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Little-Known Homeowners Insurance Facts

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If you have a homeowners insurance policy, you should be aware of what this insurance does and does not cover. These policies have their limitations as well as underrecognized perks.

Some policies insure actual cash value (ACV). ACV factors depreciation into an item’s worth. If someone makes off with your expensive camera that you bought five years ago, a homeowners policy that reimburses you for ACV would only pay for part of the cost of a new equivalent camera bought today.1

Other policies insure replacement cash value (RCV). That means 100% of the cost of an equivalent item today, at least in the insurer’s view.1

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Keep Your Life Insurance When You Retire

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Do you need a life insurance policy in retirement? One school of thought says no. The kids are grown, and the need to financially insulate the household against the loss of a breadwinner has passed.

If you are thinking about dropping your coverage for either or both of those reasons, you may also want to consider the excellent reasons to retain, obtain, or convert a life insurance policy after you retire. Take these factors into account and consult with your financial professional before making a decision.

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What Is Earnings Season?

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Every few months, you may hear the phrase “we’re entering earnings season” as you read financial news.

But what exactly is “earnings season” and why is it important to Wall Street?

Earnings season is the period of time when a majority of publicly traded companies release their quarterly financial reports. Companies often go into great detail about the forces that influenced their business for the prior three months, and some may provide guidance about what lies ahead.

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Weekly Economic Update for 7/20/2020

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THE WEEK ON WALL STREET

Stocks were mixed last week as investors reacted to positive economic data, progress on a COVID-19 vaccine, and the continued nationwide increase of COVID-19 cases.

The Dow Jones Industrial Average gained 2.29%, while the Standard & Poor’s 500 rose by 1.25%. But the Nasdaq Composite Index dropped 1.08% for the week. The mega-cap technology companies saw some profit-taking last week, sending the Nasdaq Composite to its first loss in three weeks. The MSCI EAFE Index, which tracks developed stock markets overseas, ended 2.19% higher.1,2,3

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Weekly Economic Update for 7/13/2020

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THE WEEK ON WALL STREET

Stock prices notched solid gains last week, looking past an increase in COVID-19 cases and any potential economic concerns raised by the trend.

The Dow Jones Industrial Average increased by 0.96%, while the Standard & Poor’s 500 climbed 1.76%. The Nasdaq Composite Index bounded 4.01% higher for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained just 0.07%.1,2,3

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Retirement In Sight for July, 2020

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HAS THE PANDEMIC AFFECTED THE RETIREMENT MINDSET?

Each year, the Transamerica Center for Retirement Studies surveys baby boomers, Gen Xers, and millennials to gauge their perceptions about retiring. The 2020 survey, conducted in April, studied the impact of the COVID-19 pandemic and how it may have affected their outlooks.

Overall, 53% of respondents said that their confidence about retiring remained the same during this spring’s economic turbulence. Twenty-three percent indicated they were less confident about their retirement prospects; another 13% said that they had grown more confident. Nearly half (45%) of all respondents believed that they would be able to transition to part-time work en route to retirement; 61% expected that their employers would provide them with full employee benefits, even while working part time. Fifty-two percent of all respondents believed that they would keep working past age 65, and 68% of baby boomers indicated that they planned to work or were working at 65 or later. Fewer baby boomers and Gen Xers (13%) had been laid off this spring compared to millennials (18%). Retirement saving was still the number one financial priority in life for both Gen Xers and baby boomers alike; though, the percentage of respondents saying so declined from the 2019 survey (23% to 20% for Gen Xers and 40% to 32% for boomers). In an encouraging sign for the current generation of retirees, 25% of the boomers surveyed indicated that they were debt free.1

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Weekly Economic Update for 7/6/2020

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THE WEEK ON WALL STREET

In a holiday-shortened week, stock prices turned higher as encouraging economic data outweighed an increase in COVID-19 cases and a rollback in economic re-openings.

The Dow Jones Industrial Average rose 3.25%, while the Standard & Poor’s 500 increased by 4.02%. The Nasdaq Composite Index gained 4.62% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, picked up 0.22%.1,2,3

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Monthly Economic Update for July, 2020

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U.S. Markets

Stocks rallied in May, sparked by a supportive Federal Reserve, stories of states re-opening, and reported progress on a COVID-19 vaccine.

The Dow Jones Industrial Average rose 4.2%, while the Standard & Poor’s 500 Index picked up 4.5%. The NASDAQ Composite led, gaining 6.7%.1

Shift in Focus

April’s positive momentum continued into May, as stocks registered healthy gains, and investors looked to future economic hopes rather than current woes.

Further aiding stocks was a better-than-expected jobs report and firming oil prices. Many investors breathed a sigh of relief on the news that U.S. and Chinese negotiators were planning to meet, despite the rising tensions between the two nations.

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Quarterly Economic Update for 2Q-2020

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THE QUARTER IN BRIEF

As a new quarter begins, we look back on an eventful second quarter for households and investors – a quarter in which the economy took a mighty hit, while the stock market soared. Complying with stay-at-home orders, Americans abruptly cut back on discretionary spending, traveling, and commuting, resulting in a dire scenario for some industries. Unemployment rose as business revenue declined. Fundamental economic indicators saw big swings, and on one trading day, oil prices actually collapsed into negative territory. Homes became easier to finance; though, transactions declined. The Federal Reserve made proactive moves to try and foster a bit more economic stability. While Main Street quieted, Wall Street rallied, sensing that an economic rebound might be starting. The Standard & Poor’s 500 gained 19.95% for the quarter.1

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Weekly Economic Update for 6/29/2020

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THE WEEK ON WALL STREET

A jump in COVID-19 cases dampened investor enthusiasm last week, sending stock prices lower on worries that rising infections could derail the economic recovery. 

The Dow Jones Industrial Average slumped 3.31%, while the Standard & Poor’s 500 retreated 2.86%. The Nasdaq Composite Index lost 1.90% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, declined 1.28%.1,2,3

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What Determines Car Insurance Rates?

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Your auto insurance premium is based on more than your driving history. The amount you pay for auto insurance is determined by a complicated algorithm that takes many factors into consideration. Your driving history is just one variable used to calculate your rate. Read on to learn more about what auto insurance carriers look at when they determine your premium.

Age is a key factor. Younger drivers are considered the riskiest to insure due to their lack of experience behind the wheel. Most insurance carriers consider a “young driver” to be someone under age 25. Drivers older than 25 typically pose less risk, so your car insurance premiums may drop as you get older.1

Your location makes a difference. Your location is one of the biggest factors in determining your car insurance premium. Insurance carriers use data from more than just your state and county; they often use information from your specific zip code. Insurance providers don’t just look at whether you live in an urban or rural area, but also at the motor vehicle theft and crime rate statistics where you live and park your vehicle.1

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Weekly Economic Update for 6/22/2020

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THE WEEK ON WALL STREET

Stocks moved higher last week on news of more Federal Reserve market support and diminished concerns that new COVID-19 cases might lead to another economic shutdown.

The Dow Jones Industrial Average rose 1.04%, while the Standard & Poor’s 500 gained 1.86%. The Nasdaq Composite Index jumped 3.73% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, increased 1.88%.1,2,3

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Weekly Economic Update for 6/15/2020

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THE WEEK ON WALL STREET

Investor sentiment turned negative last week, amid an increasing number of COVID-19 cases in states where re-opening has been underway as well as a subdued economic forecast from the Federal Reserve.

The Dow Jones Industrial Average dropped 5.55%, while the Standard & Poor’s 500 lost 4.78%. The Nasdaq Composite Index slipped 2.30% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, fell 3.10%.1,2,3

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Before You Claim Social Security

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Whether you want to leave work at 62, 67, or 72, claiming the retirement benefits you are entitled to by federal law is no casual decision. You will want to consider a few key factors first.

How long do you think you will live? If you have a feeling you will live into your nineties, for example, it may be better to claim later. If you start receiving Social Security benefits at or after Full Retirement Age (which varies from age 66 to 67 for those born in 1943 or later), your monthly benefit will be larger than if you had claimed at 62. If you file for benefits at FRA or later, chances are you probably a) worked into your mid-sixties, b) are in fairly good health, and c) have sizable retirement savings.1

If you really need retirement income, then claiming at or close to 62 might make more sense. If you have an average lifespan, you will, theoretically, receive the average amount of lifetime benefits regardless of when you claim them. Essentially, the choice comes down to more lifetime payments that are smaller versus fewer lifetime payments that are larger. For the record, Social Security’s actuaries project that the average 65-year-old man to live 84.0 years, and the average 65-year-old woman, 86.5 years.2

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Retirement Plan Options for Small Businesses

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As a small-business owner, figuring out retirement choices can be a little intimidating. How do you pick the most appropriate retirement plan for your business as well as your employees?

There are three main types of retirement plans for small businesses: SIMPLE-IRAs, SEP-IRAs, and 401(k)s. Read on below to learn more about each type of retirement plan. Also, keep in mind that recent legislative changes that occurred with the passing of the SECURE Act and CARES Act may complicate the decision.

SIMPLE-IRAs. SIMPLE stands for Savings Incentive Match Plan for Employees. This is a traditional IRA that is set up for employees and allows both employees and employers to contribute. If you’re an employer of a small business who needs to get started with a retirement plan, a SIMPLE-IRA may be for you. While this plan doesn’t require an employee to contribute, employers must contribute 2% of their employee’s salary to a retirement fund. If you do choose to offer a matching contribution to your employee’s SIMPLE-IRA plan, you can match up to 3% of your employee’s compensation. Employees can also participate in a SIMPLE-IRA plan by having automatic deductions go straight from their paycheck to their SIMPLE-IRA.1,2,3

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Retirement In Sight for June, 2020

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YOU MIGHT SPEND LESS – LATER IN RETIREMENT

A 2019 whitepaper by the Employee Benefit Research Institute (EBRI) indicates that Americans tend to spend less as they age.

EBRI analyzed a study from the University of Michigan, which tracked spending levels of Americans aged 50 or older for 12 years. Looking at this data, EBRI found that households headed by people aged 75 or older typically lived on 20% to 25% less per year than those aged 65 to 74.

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Weekly Economic Update for 6/8/2020

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THE WEEK ON WALL STREET

A positive jobs report sent stocks soaring last Friday, capping a solid week as evidence of a global economic recovery outweighed concerns over civil unrest and tensions with China.

The Dow Jones Industrial Average jumped 6.81%, while the Standard & Poor’s 500 advanced 4.91%. The tech-heavy Nasdaq Composite Index lagged, climbing 3.42%. The MSCI EAFE Index, which tracks developed stock markets overseas, gained 5.52%.1,2,3

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Who Is Your Trusted Contact?

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Investment firms have a new client service requirement. They must now ask you if you would like to provide the name and information of a trusted contact.1

You do not have to supply this information, but it is encouraged. The request is made with your best interest in mind – and to lower the risk of someone crooked attempting to make investment decisions on your behalf.1

Why is setting up a trusted contact so important? While no one wants to think ill of someone they know and love, the reality is that seniors have lost an average of $50,200 to someone they know. And studies have shown that almost half of all seniors aged 65 and older manage their own finances. Statistically speaking, if you fall within this age range, you could be vulnerable to scams.1

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College Funding Options

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How can you cover your child’s future college costs? Saving early (and often) may be key for most families. Here are some college savings vehicles to consider.

529 college savings plans. Offered by states and some educational institutions, these plans allow you to save up to $15,000 per year for your child’s college costs without having to file an I.R.S. gift tax return. A married couple can contribute up to $30,000 per year. (An individual or couple’s annual contribution to a 529 plan cannot exceed the yearly gift tax exclusion set by the Internal Revenue Service.) You can even front-load a 529 plan with up to $75,000 in initial contributions per plan beneficiary – up to five years of gifts in one year – without triggering gift taxes.1,2

529 plans commonly feature equity investment options that you may use to try and grow your college savings. You can even participate in 529 plans offered by other states, which may be advantageous if your student wants to go to college in another part of the country. (More than 30 states offer some form of a tax deduction for 529 plan contributions.)1,2

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Monthly Economic Update for June, 2020

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U.S. Markets

Stocks rallied in May, sparked by a supportive Federal Reserve, stories of states re-opening, and reported progress on a COVID-19 vaccine.

The Dow Jones Industrial Average rose 4.2%, while the Standard & Poor’s 500 Index picked up 4.5%. The NASDAQ Composite led, gaining 6.7%.1

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Weekly Economic Update for 6/1/2020

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THE WEEK ON WALL STREET

The shortened week, which began with a powerful two-day rally of trading, was enough to drive the markets into another week of solid gains.

The Dow Jones Industrial Average rose 3.75%, while the Standard & Poor’s 500 advanced 3.01%. The Nasdaq Composite Index climbed 1.77% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, gained 6.18%.1-3

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Eldercare Choices in the COVID-19 Era

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Given the threat of COVID-19, seniors today may be considering their extended care alternatives with extra caution.1

In addition to health factors, the cost can be an issue. According to Genworth’s 2020 Cost of Care Survey, the median annual cost of a semi-private room in a nursing home is now $90,000. A single-occupancy room may cost over $100,000 a year.1

While you could designate a portion of your retirement savings for possible extended care costs, there are other choices to consider as well.1

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Making a Charitable Contribution

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Why sell shares when you can gift them? If you have appreciated stocks in your portfolio, you might want to consider donating those shares to charity rather than selling them.

Why, exactly? Donating appreciated securities to a tax-exempt charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.1

Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. Make sure to consult your tax, legal, and accounting professional before modifying your gift-giving strategy.

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Weekly Economic Update for 5/25/2020

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THE WEEK ON WALL STREET

Upbeat comments by the Federal Reserve Chairman and more signs of an economic turnaround combined to help fuel a powerful rally in the stock market last week.

The Dow Jones Industrial Average rose 3.29%, while the Standard & Poor’s 500 advanced 3.20%. The Nasdaq Composite index climbed 3.44% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.87%.1-3

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“Backdoor” Roth IRAs

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You can sum up the appeal of a Roth IRA in three words: federal tax benefit. Potential earnings in a Roth IRA grow tax free as long as the owner abides by the Internal Revenue Service (I.R.S.) rules, and withdrawals are federally tax free once you reach age 59½ and have held the Roth IRA for at least five years.1

Unfortunately, some people make too much money to contribute to one. In 2020, joint filers with modified adjusted gross incomes (MAGI) of $206,000 or more and single filers with MAGI of $139,000 are not eligible for a ROTH IRA.

There is a way for high earners to bypass these limits, however: the “backdoor” Roth IRA strategy.2

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Weekly Economic Update for 5/18/2020

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THE WEEK ON WALL STREET

Stocks drifted lower last week, weighed down by Federal Reserve Chairman Jerome Powell’s unsettling comments on the economy and signs of renewed tensions with China.

The Dow Jones Industrial Average fell 2.65%, while the Standard & Poor’s 500 retreated 2.26%. The Nasdaq Composite Index slipped 1.17% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, slid 3.66%.1,2,3

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The Pros and Cons of Early Retirement Plan Rollovers

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Did you know you might be able to take some or all of the money in your 401(k), 403(b), or 457 plan and roll it over into another type of retirement account? Were you aware that you could do this while you are still working for your current employer – without any withholding or early withdrawal penalties?

Let’s look at how these rollovers can happen and the pros and cons of making them.  

Some 401(k), 403(b), and 457 plans offer this kind of flexibility. If your plan provides this choice, you must first pay attention to the rules.

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Retirement In Sight for May, 2020

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HOW SHOULD PRE-RETIREES VIEW ILLIQUID ASSETS?

Some people approach their retirement years owning illiquid assets worth more than their liquid ones. While long-held illiquid assets, such as a business or home, may become highly valued or appreciated over time, it can be wise to be frank and conservative when estimating their worth, especially if an owner wants to sell them to help fund their “second act.”

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Weekly Economic Update for 5/11/2020

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THE WEEK ON WALL STREET

Despite an historic downturn in employment, stocks managed to climb higher last week as investors were emboldened by the pace of economic re-openings here and abroad.

The Dow Jones Industrial Average gained 2.56%, while the Standard & Poor’s 500 advanced 3.50%. The Nasdaq Composite Index jumped 6.00% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 1.09%.1,2,3

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May Is Disability Insurance Awareness Month

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Did you know that May is Disability Insurance Awareness Month? First started in 2007, the month of May was the first time that information about disability insurance became more easily accessible to millions of Americans. Recently, Disability Insurance Awareness Month has become a time in which many insurance professionals come together in order to help educate the public on the importance of disability insurance.1

What is disability insurance? If you are unable to work due to illness or injury, disability insurance may help by replacing a portion of your regular income. This can be essential if you are burdened with medical expenses and unable to work.2

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Monthly Economic Update for May, 2020

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U.S. MARKETS

Stocks rebounded sharply in April, fueled by a flattening pandemic curve and positive results from a clinical trial investigating a treatment for COVID-19.

The Dow Jones Industrial Average, which dropped 14% in March, jumped 11.08%. The Standard & Poor’s 500 Index rose 12.68%, and the NASDAQ Composite surged 15.45%.1

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Weekly Economic Update for 5/4/2020

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THE WEEK ON WALL STREET

Stock prices ended the week slightly lower, despite news of positive results from a test trial of a COVID-19 drug treatment and several states easing their economic lockdowns.

The Dow Jones Industrial Average slipped 0.22%, while the Standard & Poor’s 500 lost 0.21%. The Nasdaq Composite Index dropped 0.34%. The MSCI EAFE Index, which tracks developed stock markets overseas, rose 4.34%.1,2,3

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Tax-Loss Harvesting

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Even though this may end up being a subpar year for stocks, you may realize capital gains, which is a taxable event. What can you do about them? You can do what some investors do – you could recognize investments with a loss and practice “tax-loss harvesting.” 

Keep in mind this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your tax legal and accounting professional before modifying your investment strategy.

Selling losers to offset winners. Tax-loss harvesting means taking capital losses (you sell securities worth less than what you first paid for them) to help offset the capital gains you may have recognized. Keep in mind that the return and principal value of securities will fluctuate as market conditions change and past performance is no guarantee of future returns.1 

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Federal Student Loan Relief

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Are you or someone you know currently making federal student loan payments? In light of the COVID-19 pandemic, some welcome relief may be on the way.

Thanks to the recent passage of the CARES Act, the U.S. Department of Education will allow you to temporarily halt your federal student loan payments from March 13, 2020 until September 30, 2020.1

What should you do next?

At this time, no action is necessary. As part of this relief initiative, all federal student loans will be placed in an administrative forbearance and automatic payments will be paused from March 13 to September 30, 2020.

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FAQs About the 2020 Stimulus Checks

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The federal government is providing a little economic relief to many taxpayers. The Internal Revenue Service is sending millions of Economic Impact Payments – or as they are commonly called, stimulus checks – to households.

Here are some facts to know about these payments. Keep in mind: this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your tax professional before modifying your strategy.

Who gets a check? If you have a Social Security Number and have not been claimed as a dependent on another taxpayer’s most recent federal tax return, you may be eligible for a stimulus payment of up to $1,200. Any money you get is tax free, and the payment will not be counted against a federal tax refund coming your way or federal benefits you currently receive.1

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Details on the Tax Deadline Extension

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The Internal Revenue Service knows that many taxpayers have had a stressful spring. So, it has reset the federal tax deadline. You now have until July 15 to file your 1040 form. July 15 is also the deadline to pay any federal taxes owed for 2019.1

Beyond these important details, there are others to note. Keep in mind: this article is for informational purposes only. It's not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your strategy. 

The extended tax deadline still falls on October 15. This year, the 6-month extension is now a 3-month extension. If you owe federal taxes, you must still pay them by July 15.2

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A Stock Market Lesson to Remember

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Undeniably, spring 2020 has tried the patience of investors. An 11-year bull market ended. Key economic indicators went haywire. Household confidence was shaken. The Standard & Poor’s 500, the equity benchmark often used as shorthand for the broad stock market, settled at 2,237.40 on March 23, down 33.9% from a record close on February 19.1

On April 17, the S&P closed at 2,874.56. In less than a month, the index rallied 28.5% from its March 23 settlement. And while past performance does not guarantee future results, there is a lesson in numbers like these.1

In the stock market, confidence can quickly erode – but it can also quickly emerge. That should not be forgotten.

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