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New Laws and Tax Strategies for 2020

June 2020 Over the past six months, Congress has passed two new laws that affect retirement, charitable giving, and estate planning. The new laws known as the SECURE (Setting Every Community Up for Retirement Enhancement) Act and the CARES (Coronavirus Aid, Relief, and Economic Security) Act present changes and opportunities for some common planning concerns. In this paper we discuss a few of the laws’ changes and provide suggestions for actions that may be beneficial to your own financial plan.   Changes to Required Minimum Distributions (RMDs)   The SECURE Act raised the starting age for RMDs from qualified retirement […]

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Maintain a Disciplined Approach

April 2020     Mitigation efforts to slow the spread of COVID-19 are affecting the daily lives of people around the world. Some 2.6 billion people are now living under government imposed restrictions due to the virus. What seemed in February to be an event limited mostly to China, much like SARS in 2003, has quickly become a global pandemic. The mandatory closings of schools, businesses, and other institutions to slow the virus’s spread has layered financial losses on top of health concerns and left many investors fearing more to come.   The degree to which the virus mitigation efforts […]

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A message about the market’s reaction to Coronavirus

Given recent events, extreme volatility, and understandable concern, we want you to know we are very much present and assessing new information as it becomes available. We have a long-established business continuity plan in place, designed to ensure the safety of our staff and visiting clients and to ensure we are available for you at any time. As is so often the case, bouts of extreme market volatility are generally triggered by unforeseen events and culminate in capitulation and panic selling. Are we there yet? Impossible to say, but we do know this much: extreme measures are now being taken […]

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Markets Soar in an Imperfect Economy

The stock market reminded us again this past year that a perfect economy is not required to push stock prices higher. Rather, prices climb on signs of incremental improvements. One by one the concerns that dominated the headlines at the start of the year—Federal Reserve interest-rate increases, recession risk, and trade disputes—reversed, faded, or improved. And as that occurred, investors became, if not optimistic, at least less pessimistic.   The end result was a U.S. stock market that produced a generous 31.5% total return in 2019.1 We don’t wish to diminish that achievement, but it should be mentioned that most of […]

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What the markets are telling us

What is one to make of the markets over the past six months? First the stock market fell 20% and bond yields declined, both correctly predicting a slower economy. Then in late December the stock market, in an apparent vote of confidence in the economy, began a rally that has taken it back close to its all-time high.1 The bond market, however, stayed on its prior course with yields on longer maturity bonds falling until, for a brief two days, the 10-year Treasury bond’s yield was slightly below the 3-month Treasury bill’s yield. Many observers consider this crossing of yields, […]

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Why Own Bonds?

The first three quarters of 2019 have produced unexpectedly strong results for bond investors. Slowing global economic growth, declining inflation expectations, and accommodative central bank policies have combined to push interest rates lower, causing broad price increases across fixed-income markets. Indeed, as measured by the Bloomberg Barclays US Aggregate Index, fixed-income returns have been a surprisingly strong 8.52% year-to-date. Investment-grade and high-yield corporate bonds have had even stronger performance, with year-to-date returns of 13.2% and 11.4%, respectively1.   And while many investors may be pleased with the year-to-date price performance of their bonds, the resulting decline in yields across bond […]

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Why Your Bonds Should Be Actively Managed

Investors have shown increasing acceptance of passive investment strategies. Meanwhile, funds that employ active strategies—that is, those with managers who strive to outperform their benchmarks—have lost market share to lower cost, passive mutual funds and exchange-traded funds (ETFs). Offering a diversified basket of securities to replicate broad markets, these passive funds and ETFs have become increasingly common core holdings in investor portfolios. For example, one of the most widely held passive stock funds, the Vanguard 500 Index Fund (VFINX), replicates the U.S. large-cap stock universe as reflected by the S&P 500® Index. The most widely held passive bond ETF, the […]

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Understanding Your Risk Capacity

We all face risks as investors. Stock market volatility, interest rate changes, and permanent loss of capital are just a few of the many risks we confront in pursuit of satisfactory investment returns. And avoiding investment risk, unfortunately, only exposes us to yet another risk—the risk of not earning sufficient returns to meet our needs.   But how much risk is appropriate? The answer is different for every investor and depends in part on your risk tolerance and your risk capacity. Risk tolerance is about emotions. How do you emotionally respond to seeing your investments decline in value due to […]

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The Spending Question

How much can I spend each year without depleting my portfolio? It’s a question we hear often from clients. While the question is simple, calculating the answer is not.   One conservative answer is to spend only the income your investment portfolio generates. Unfortunately, making this strategy work in today’s low-yield environment requires a very large portfolio relative to your annual spending. In fact, your portfolio needs to be over 43 times the size of your annual spending. That number is based upon the current 2.3% average yield for a portfolio balanced between stocks and high- quality bonds.1 Such a […]

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Our Long-Term Outlook

It’s not just people who like to take time off now and then. Apparently, volatility also enjoys some time off—at least that’s what this past year’s stock market performance would indicate. Instead of being subjected to the usual bouts of volatility, the U.S. stock market has been on an uninterrupted 14-month streak of positive returns.1 And positive results were not limited to the U.S. market. Economic growth took hold across the globe in 2017, pushing up stock prices with it. The U.S. stock market’s 21.8% total return for 2017, as measured by the S&P 500® Index, ranked just 37th among […]

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