A Recent report from JP Morgan outlines once again for the patient investor, that diversification The current bull market has not been kind to asset allocation, and following the post-election run in equity markets, some investors are wondering: is diversification still worth it? Frankly, this is a fair question to ask – as of February, the S&P 500 had outperformed an asset allocation portfolio* by 54.7% on a cumulative five-year basis, a statistic that is sure to sting investors who might already feel that they have missed out on the full potential of this bull market.
At its March 15 meeting, the Federal Open Market Committee did what many expected: raised the target federal funds rate to between 0.75% and 1%. The 25-basis-point increase was in line with market expectations and reflected “the economy’s continued progress toward the employment and price stability objectives,” according to Federal Reserve (Fed) Chair Janet Yellen. The central bankers last raised rates three months ago at their mid-December meeting.
A recent study on Safeguarding our Seniors conducted by Allianz indicated that elder financial abuse is becoming more commonplace and appears to be greater than we thought in both scope and impact. This latest study also exposed the damaging effects of abuse extend well beyond the seniors themselves to their caregivers.
There are numerous prognosticators purporting extreme valuations by the so called “perma-bears” who tend to cost investors more than they save them by warning of a doom and gloom market scenario. We have indeed seen valuations run up to the latest forward PE ratio on the S&P of 17.8x forward estimates vs. 15.9 for the 25 year average. This is certainly no bargain pricing but neither is it extreme as we saw in 1999 when the S&P was valued at 25x forward estimates. Please see below the latest comments from Andrew Adams, the Raymond James Financial Strategist working with the well -seasoned Jeff Saut in an excerpt from Morning Tack dated 3/14/17 (a full copy is available upon request):
It’s been a few years now to get familiar with the Medicare payroll tax and surtax that went into effect at the beginning of 2013. If you need a reminder, taxpayer with modified adjusted gross income (MAGI) of $200,000 for individuals or $250,000 for couples filing jointly face a 3.8% surtax on net investment income or the amount of MAGI that exceeds the thresholds prescribed for high-income taxpayers. The second 0.9% Medicare payroll tax applies to wages and self-employment income over the same MAGI thresholds. And while we may have gotten more used to the higher tax, that doesn’t mean we shouldn’t look to smart planning to avoid overpaying. Talk to your financial advisor, alongside your accountant or tax advisor, to identify and implement the strategies that are most advantageous for your situation. Here are some options to consider.
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