Spring Thaw

The weather is finally starting to turn, and economic data is returning to a more trustworthy state.  It’s early however and first quarter earnings season is just beginning as well.  Expectations are relatively low, in large part due to the weather, but there is increased interest in forward guidance which could be the catalyst for the next move in the market.  With corporate confidence improving and some fiscal concerns receding, we expect a relatively optimistic, yet cautious, tone to prevail. On the economic front, both versions of the Institute for Supply Management’s (ISM) surveys showed improvement.  The Manufacturing Index rose while new orders encouragingly increased.  The Non-Manufacturing Index, representing the larger service side of our economy, showed a nice gain with the employment component having the largest gain.  Auto sales appear to be rebounding from a weather induced pause, indicating that consumer demand is still decent and confidence is improving.   The Leading Economic Indicators Index (LEI) rose in March, the most in four months, and above consensus estimates. Six of its ten components made positive contributions indicating widespread strength among Read on! →

Market-View 1st Quarter 2014

Portfolio Recap As the 1st quarter of 2014 came to a close and the 2nd quarter began, the US stock market remained near record highs.  Talk by the Federal Reserve of ending (tapering) their quantitative easing program sooner, questions around whether corporate earnings can support valuations and recent geopolitical events in the Ukraine, all contributed to increased volatility and concerns over how much longer the current 6 year bull market will continue.  Through all of this, your portfolios showed resiliency and experienced steady, positive performance. Our diversified approach to managing investments continued to focus on limiting downside equity risk through a bias for value-oriented, dividend paying domestic and international equities.  In the short term, volatility and potential for loss has been further mitigated by allocating fewer investment dollars to small cap and emerging international, both of which carry more risk than other areas in the equity markets.  Small cap has also experienced significant gains over the past several years further motivating a reduction because we believe the prospect for significant future appreciation has diminished.  Hybrid investments, led by preferred stock, Read on! →

Is a Roth IRA right for you?

Roth IRAs get a lot of attention in the media, particularly aimed toward younger investors in their early earning years. Roth IRAs provide an additional way to save for retirement with after-tax dollars, but how do you know if a Roth IRA is right for you? Consider the following. Tax Advantages Roth IRAs are funded with after-tax contributions, meaning that you contribute after-tax dollars today to avoid paying tax on the money when it is withdrawn in the future. Essentially, you are giving up the current tax deduction for the future tax-free benefit in retirement. Traditional IRAs are just the opposite – you receive a tax deduction today (assuming you are within the IRS-defined deductibility limitations), but then pay tax on the contributions and earnings when withdrawn in retirement.  If you expect your income to increase over time pushing you into a higher tax bracket when you retire (as demonstrated in the illustration below), or you have a long time horizon for the tax-free earnings to build substantially over time, a Roth IRA may be a good option for you. Read on! →

Is your plan measuring up to reality?

For those of you who are behind in saving for your eventual retirement, I want to encourage you to save while you have the opportunity.  You may think you have plenty of time before the money is needed, or you may pass off the issue with, “I’ll just work longer, maybe until I’m 70.”  However, the reality of a later retirement in order to accumulate more savings may ultimately be out of your control.  Consider below – the expectations for a later retirement versus the actual experiences of retirees.  A majority who thought they would retire post-65, in actuality retired before 65.  Current Expectations of Retirement vs. Actual Experience of Retirees (click each graph to view larger):   Source: Employee Benefit Research Institute and Mathew Greenwald & Assoc., Inc., 2013 Retirement Confidence Survey In most cases, the reason for early retirement was not related to sufficient accumulation of retirement savings prior to age 65.  As you can see from the chart above, the primary reason for leaving the work force earlier than planned was due to health problems or disability.  So Read on! →