Social Security Status Report - We often have the concern raised in financial planning discussions on the viability of Social Security and should we be concerned that it will be around when those now eligible and the other millions that will retire in the next 5-10 years. This is one of the entitlements that congress most likely will never let slip away but something dramatic will have to occur to maintain benefits. Most likely, those who have the most means with the largest benefits will be affected if cuts need to occur.
Here’s an executive summary of some of the key market and economic data suggest we’re continuing to see moderate growth but not enough to have the Fed put the brakes on with sharp rises in interest rates. Despite the geo political and global risks and commotion, the U.S. and international markets have been trending upward and onward….
A 401(k) is a retirement savings plan sponsored by an employer that lets workers save and invest a portion of their paycheck before taxes are taken out. 401(k) plans emerged in the 1980’s as a supplement to pensions. Pensions known as defined benefit plans became more and more expensive for large corporations as the aging demographics required more workers and fund performance to guarantee pension income for retired workers. But as the cost of running pensions escalated, employers started replacing them with 401(k) plans, a type of defined contribution plan.
I find it fascinating that our most successful and fulfilled clients are those that are the most charitably involved in all kinds of organizations helping others. As we all know, we’ll leave it all behind, why not benefit others in need while we’re living and beyond the grave. As Christ instructed in the New Testament, “To whom much has been given, much is required”. Whether its youth programs like the Boys & Girls Clubs, Boy Scouts, Kids on the Run, Rotary clubs, Teen Mentoring programs, YMCA, Habitat for Humanity, Good Samaritan Clinic, Historical Societies, Arts Organizations, Missions and Job Creation organizations, the list is endless.
There are always lurking worries and concerns, reasons to prevent investors from having confidence in the long-term prospects of growth in the capital markets. Most end up waiting until “it feels good” or the perfect time to invest and we know that never really happens. Then, when stock prices are at all-time lows, few have the courage to step up and buy low at precisely the prime time of best opportunity. The saying goes, “stocks are the only thing people don’t want to buy when they’re on sale”. There is always something new, different and scary that we’ve never experienced before. But looking back over history from the great depression and market crash of the 20’s and 30s’ WWII, Korean war, Vietnam, the Oil embargo, assassinations, a severe recession in the 70s, sky rocketing interest rates in the 80’s, terrorist attacks, impeachment proceedings, government shutdowns, the list goes on……
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.
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):
Many homeowners and several of our clients over the years have raised the question on paying down debt with extra cash or other liquid investments. It really all depends on a few key questions.
National authors William Strauss and Neil Howe who are mostly credited with originating the name in 1987, define Millennials as born between 1982-2004. Strauss and Howe ascribe seven basic traits to the millennial cohort: “special, sheltered, confident, team-oriented, conventional, pressured, and achieving.” American sociologist Kathleen Shaputis labeled Millennials as the Boomerang Generation or Peter Pan generation, because of the members perceived tendency for delaying some rites of passage into adulthood for longer periods than most generations before them. These labels were also a reference to a trend toward members living with their parents for longer periods than previous generations. 1 (See the movie Failure to Launch- LOL)
Over the last year and even five or six years, in my opinion, many Investors are mistakenly evaluating their portfolio returns vs. some random benchmark like the Dow Jones 30 Industrials or the S&P 500. This is very tempting since dropping to a bear market low on 3/09/09 (i.e., approximately 94 months ago), the S&P 500 stock index has gained +291% (total return) through the close of trading on Friday 12/30/16 or an average gain of +1.5% per month, (source: BTN Research).
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