Our clients, of course, each have the benefit of a direct relationship with us when they have questions or need information or analysis. That is not news. But, did you know that we also provide an entire website of financial resources available to the public called MyRetirementPro.com?
Why are we telling you this now? MyRetirementPro.com has a new look and a fresh batch of content to share!
Please feel free to explore the new video section, updated calculators, new articles, and more. And be sure to let us know what other resources or topics you, or people you know, might like to see us highlight.
We encourage you to pass the link along to your family, friends, co-workers, neighbors. MyRetirementPro.com is for people looking for a trusted source but are perhaps not ready or able to start a long-term relationship with our one-stop financial team.
Sources: Index Returns: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized excluding dividends. Interest Rates: Federal Reserve, Freddie Mac
US ECONOMIC HEAT MAP
The health of the US economy is a key driver of long-term returns in the stock market. Below, we grade 5 key economic conditions that we believe are of particular importance to investors.
CONSUMER SPENDING
A+
Consumer spending is expected to remain healthy as individuals with lower tax rates spend their windfalls.
FED POLICIES
C-
The Federal Reserve increased the Fed Funds Rate by 0.25% in March, and is expected to implement at least 2 more hikes this year. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.
BUSINESS PROFITABILITY
A
Q1 Earnings was very strong, with US companies reporting YoY earnings growth of 25%.
EMPLOYMENT
A+
The unemployment rate has dropped below 4% for the first time since 2000. Additionally, there are over 6 million unfilled job openings throughout the economy; close to an all-time record.
INFLATION
B
Inflation is often a sign of “tightening” in the economy, and can be a signal that growth is peaking. The inflation rate remains benign at this time, but we see the potential for an increase moving forward. This metric deserves our attention.
OTHER CONCERNS
INTERNATIONAL RISKS
5
The above ratings assume no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 5. These risks deserve our ongoing attention.
The “Heat Map” is a subjective analysis based upon metrics that VNFA’s investment committee believes are important to financial markets and the economy. The “Heat Map” is designed for informational purposes only and is not intended for use as a basis for investment decisions.
Strategies to Maximize Tax Deferral for Married Couples With one or Both Spouses Working Required Minimum Distributions (RMDs) from retirement accounts begin when the owner reaches age 70-1/2. Naturally the younger spouse’s RMDs will begin later and therefore have the opportunity to remain tax-deferred longer.
Strategy 1 — Employer Retirement Plans: During working years, after taking advantage of employer matching funds, maximize subsequent contributions to the younger spouse’s retirement account first and then save any remainder to the older spouse’s account.
Strategy 2 — Contributions to Roth IRAs: Roth IRAs are not subject to RMDs for the original owner. If a couple desires to contribute a portion to Roth IRAs, the initial savings should go to the older spouse’s Roth IRA, then the younger spouse’s Roth IRA or Traditional IRA.
Strategy 3 — Roth Conversions: Logic is similar to Strategy 2. Converting a Traditional IRA to a Roth IRA results in the assets becoming tax deferred for life — no RMDs. For couples with an age gap, converting the older spouse’s IRA will reduce the older spouse’s future RMDs and retains the younger spouse’s RMDs.
The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP®, AEP®. This week Laurie will discuss:
“Life’s big events and how to plan and budget for them.”
Laurie will take your calls on this or other topics. This show will be broadcast at the regular time WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton and Phillipsburg area– or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.
“Before you speak, listen. Before your write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.” – William Arthur Ward
by Connor Darrell, Head of Investments Bonds rallied last week, with the 10-Year Treasury yield dropping back below 3% and the Bloomberg Barclays U.S. Aggregate Bond Index posting gains of 0.74%. Stocks produced mixed results, with the U.S. outperforming its International counterparts.
Another By-Product of “Low for Long” Interest Rates: Corporate Debt Moody’s, a well-respected provider of credit research, issued a sobering report earlier this month warning of the potential for “a particularly large wave” of defaults on below investment grade corporate bonds when the next economic downturn eventually arrives. The report cites the low interest rate environment as a key contributor to a significant increase in the amount of corporate debt outstanding and a subsequent rise in the number of global non-financial companies carrying below investment grade credit ratings.
Coming out of the financial crisis, with interest rates at their lowest levels in decades, many corporations took advantage of the low rates to go out and borrow additional funds to invest in their businesses. And with investors starved for yield, even many companies that were in poor financial health were able to issue debt at relatively low rates. This has been beneficial to the overall investment climate and a tailwind for the stock market, but may leave many companies exposed in the event of a prolonged economic downturn.
Default rates on corporate bonds remain very low, but the Moody’s report highlights the need to be vigilant, even in strong economic environments. We have discussed in past communications that we find ourselves in uncharted waters with respect to monetary policy, making it even more important to be on the lookout for potential risks in the marketplace. Rising levels of corporate debt is certainly one of those risks to watch.
Our clients, of course, each have the benefit of a direct relationship with us when they have questions or need information or analysis. That is not news. But, did you know that we also provide an entire website of financial resources available to the public called MyRetirementPro.com?