Stock market fear, coronavirus, investing

what to do now

The fear of the coronavirus is getting a lot of headline news and impacting markets globally. I don’t want to pander to the fear but rather mention potential opportunities and illustrate information to keep in mind with all that is taking place. Opportunities: Refinance – With the stock market down interest rates are also dropping. Lower interest rates can benefit borrowers. It could be a good time to refinance your mortgage, or possibly other debt you may have. If refinancing I recommend doing it strategically. A lower interest rate is great, but restarting a 30 year loan may actually have you pay more interest than not refinancing, so I suggest using any monthly savings to accelerate the debt repayment or invest to be sure you are taking advantage of the savings. If you’d like a referral to a loan officer to help you evaluate this just let me know. Revisit Your Investments – Market volatility can cause us to do a gut-check in regard to our tolerance for risk. The generally steady rise in markets over the last decade may have led you to think you are more risk tolerant than you actually are. It’s a good time to revisit your investments in light of this reminder of the ups and downs of investing. If you want to evaluate your risk tolerance considering your investments, email me and I’ll send you a link to complete this online. Invest – If you have excess funds available it may be a good time to invest some of that money. It’s impossible to time the exact bottom, however, you can buy stocks cheaper now then you could several months ago. Tax plan – If you have investments in taxable accounts (non-retirement) that have lost value you may be able to sell those and realize a loss. If you do this, it’s often a good idea to purchase another investment so you don’t miss out on the eventual rebound. To take advantage of the tax savings be sure you are familiar with wash-sale rules and don’t repurchase the same investment within 30 days. Perspectives: A health crisis downturn doesn't last forever    Source: Vanguard calculations, based on data from FactSet.Notes: U.S. stocks are represented by the S&P 500 Index. U.S. bonds are represented by the Bloomberg Barclays U.S. Aggregate Bond Index through December 31, 2009; Bloomberg Barclays U.S. Aggregate Float Adjusted Index thereafter.The performance of an index is not an exact representation of any particular investment, as you cannot directly invest in an index.   Sources: Vanguard calculations, using data from FactSet. All data as of June 28, 2019.Notes: This is a hypothetical illustration. Balanced portfolio is represented by 60% S&P 500 Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index; bonds are represented by Bloomberg Barclays U.S. Aggregate Bond Index; and cash is represented by Bloomberg Barclays U.S. 3-Month Treasury Bellwether Index.Past performance is no guarantee of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.  Since 1980 there have been: 12 Corrections - Declines of 10% or more8 Bear Markets - Declines of 20% or more, at least two months long5 Recessions - Declines in economic conditions for two or more successive quarters (refers to declines in the broad economy rather than the financial markets, though the two can be linked).Source: Vanguard. The back-to-back weekly losses that occurred the weeks of February 16th and 23rd of at least 3% each for the S&P 500 was the 10th such occurrence since 1950. In the nine previous times this happened, the S&P 500 was up one year later each time, gaining between 6.2% to 45%, with all nine gains averaging a 22.8% gain.Source: BTN Research Note: This is not a prediction of what will happen this time, rather a reminder that markets often rebound fairly quickly.  If you have questions regarding your financial plan or investments, please feel free to call me or email me at advisor@blakegallion.com.   Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

IRA Retirement Distributions

The secure act

The SECURE Act, which stands for Setting Every Community Up for Retirement Enhancement, was signed into law at the end of 2019. Below is a summary of some key provisions of the law as well as planning considerations that are presented as a result:  - Required Minimum Distributions delayed to age 72 – Prior to this law RMDs had to begin at age 70.5, so this delays that requirement but only for those who haven’t already started their RMDs. There is now more opportunity for your retirement accounts to grow and defer taxes. This could be a good opportunity to review your tax situation and consider or expand Roth conversions. - No age limit on IRA contributions – The age limit of 70.5 for IRA contributions is eliminated so as long as you have earned income you can continue to contribute. - Elimination of the “stretch” provision for beneficiaries – Those inheriting an IRA used to have an option of “stretching” the required distributions over their life expectancy. That rule has been changed and inherited retirement accounts must be distributed within 10 years. However, there are exceptions as this does not apply to spouses, minor children, chronically ill, disabled and anyone not more than 10 years younger than the account owner. This can have a significant impact for certain families, and it could be a good time to review your estate plan. - New parents can take penalty-free withdrawals – In the first year of birth or adoption, parents can take up to $5,000 each from retirement plans. However, though the penalty is avoided taxes still apply. The flexibility that this option adds is nice, but it can also take away from the long-term growth of the account, so I recommend only doing this if necessary. - Repay student loans with 529 funds – You didn’t use to be able to repay student loans with 529 funds, however, now you can use 529 accounts to repay up to $10,000.  - Employer plan changes – There were numerous changes to small business and employer sponsored plans. Of all the changes these are probably the most significant as it relates to the bill living up to its name of setting people up for retirement. Many changes were put in place to increase access to retirement plans for more people. If you are an employee some changes may affect your plan. If you’re an employer you should discuss your plan with your plan administrator, and if you don’t have a plan consider starting one. Some changes include:          - Allowing small businesses to join with other employers to set up 401K plans, with                      reduced cost and liability.          - An increased tax credit to small businesses that start a plan, and a new tax credit for                  those that include an “auto-enrollment” in the plan.          - An ability to include annuities in retirement plans to create a stable retirement income.            Requiring 401K statements to include a calculation of what your projected monthly                  retirement income could be based on your balance. If you have questions on how any of this may impact you, please feel free to contact me or shoot me an email at advisor@blakegallion.com.   Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Q4, 2019 and the last decade

Q4 provided a strong finish to the year with US stocks up 9.1%, international stock up 7.86% and emerging markets up 11.84%. Bonds were relatively flat in Q4 with US bonds up 0.18% and global bonds down 1.11%. 2019 was a great year all around for investors. The US stock market was up 31.02%, international markets were up 22.49% and emerging markets were up 18.42%. The US bond market was up 8.72% and global bond markets were up 7.57%. Don’t you wish every year was like this? The US stock market had its best year since 2013 and US bonds had their best year since 2002! For a detailed market overview covering Q4 and all of 2019, click here. To provide a valuable perspective for investing, last year I compared 2017 to 2018, showing the difference a year can make. Now let’s look at the difference a decade can make. Average annualized return:                                        2000-2009       2010-2019       CombinedUS Stocks (S&P 500)                                                    -0.95%              13.55%                6.05%International Stocks (MSCI EAFE)                               1.17%               5.5%                    3.31%Emerging Markets (MSCI Emerging Markets)           9.77%              3.68%                  6.68%US Bonds (Barclays US Ag. Bond)                               6.33%              3.74%                  5.03%International Bonds (Barclays Global Ag. Bond)        6.49%              2.48%                 4.46% This is a great reminder to align your investments with your objectives since even over fairly long periods of time (which I would consider 10 years to be) results can vary drastically. And of course, it is important to maintain broad diversification to help smooth out the ups and downs. Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

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Retirement Planner in San Diego

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557​

Rancho Bernardo Financial Planner