Author Archive for Alex Calvert

When You Retire Without Enough

Start your “second act” with inadequate assets, and your vision of the future may be revised.

   

How much have you saved for retirement? Are you on pace to amass a retirement fund of $1 million by age 65? More than a few retirement counselors urge pre-retirees to strive for that goal. If you have $1 million in invested assets when you retire, you can withdraw 4% a year from your retirement funds and receive $40,000 in annual income to go along with Social Security benefits (in ballpark terms, about $30,000 per year for someone retiring from a long career). If your investment portfolio is properly diversified, you may be able to do this for 25-30 years without delving into assets elsewhere.1

 

Perhaps you are 20-25 years away from retiring. Factoring in inflation and medical costs, maybe you would prefer $80,000 in annual income plus Social Security at the time you retire. Strictly adhering to the 4% rule, you will need to save $2 million in retirement funds to satisfy that preference.1

 

There are many variables in retirement planning, but there are also two realities that are hard to dismiss. One, retiring with $1 million in invested assets may suffice in 2018, but not in the 2030s or 2040s, given how even moderate inflation whittles away purchasing power over time. Two, most Americans are saving too little for retirement: about 5% of their pay, according to research from the Federal Reserve Bank of St. Louis. Fifteen percent is a better goal.1

 

Fifteen percent? Really? Yes. Imagine a 30-year-old earning $40,000 annually who starts saving for retirement. She gets 3.8% raises each year until age 67; her investment portfolio earns 6% a year during that time frame. At a 5% savings rate, she would have close to $424,000 in her retirement account 37 years later; at a 15% savings rate, she would have about $1.3 million by age 67. From boosting her savings rate 10%, she ends up with three times as much in retirement assets.1

   

Now, what if you save too little for retirement? That implies some degree of compromise to your lifestyle, your dreams, or both. You may have seen your parents, grandparents, or neighbors make such compromises.

 

There is the 75-year-old who takes any job he can, no matter how unsatisfying or awkward, because he realizes he is within a few years of outliving his money. There is the small business owner entering her sixties with little or no savings (and no exit strategy) who doggedly resolves to work until she dies.

 

Perhaps you have seen the widow in her seventies who moves in with her son and his spouse out of financial desperation, exhibiting early signs of dementia and receiving only minimal Social Security benefits. Or the healthy and active couple in their sixties who retire years before their savings really allow, and who are chagrined to learn that their only solid hope of funding their retirement comes down to selling the home they have always loved and moving to a cheaper and less cosmopolitan area or a tiny condominium.

      

When you think of retirement, you probably do not think of “just getting by.” That is no one’s retirement dream. Sadly, that risks becoming reality for those who save too little for the future. Talk to a financial professional about what you have in mind for retirement: what you want your life to look like, what your living expenses could be like. From that conversation, you might get a glimpse of just how much you should be saving today for tomorrow.

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

Citations.

1 – investopedia.com/retirement/retirement-income-planning/ [6/7/18]

Weekly Economic Update 11-5-18

HIRING SURGED LAST MONTH

The Department of Labor’s latest employment report painted a picture of a thriving economy. Payrolls expanded with 250,000 net new hires in October, with wages improving 3.1% year-over-year (that was the best 12-month wage increase in nine years). Unemployment remained remarkably low at 3.7%; underemployment, as measured by the U-6 rate, ticked down 0.1% to 7.4%. October marked the labor market’s 97th straight month of expansion; the main jobless rate has been under 5% for two years. Last month, there were 7.1 million job openings and 6.1 million unemployed Americans.1,2

 

HOUSEHOLD SPENDING, CONFIDENCE REMAIN STRONG

The Department of Commerce reported an advance of 0.4% for personal spending in September, though personal incomes improved by only half that. The Conference Board’s consumer confidence index displayed an excellent 137.9 reading for October.2,3

 

ISM’s FACTORY SECTOR PMI DECLINES

Slipping to 57.7 for October, the Institute for Supply Management’s purchasing manager index of manufacturing activity remained far above the 50 mark that serves as the index’s line between sector expansion and contraction. In September, this PMI reached 59.8.3

 

RED TURNS TO GREEN ON WALL STREET

Last week saw all three major U.S. equity benchmarks add value. A 2.36% weekly gain left the Dow Jones Industrial Average at 25,270.83 when Friday’s trading day concluded. The Nasdaq Composite rose even more, improving 2.65% in five days to wrap up the week at 7,356.99. Not to be outdone, the S&P 500 advanced 2.42%. At Friday’s closing bell, it stood at 2,723.06. Thanks to these performances, the big three turned positive again for the year.4

 

 

T I P   O F   T H E   W E E K
The cost of traveling can surprise you over the holidays. It can be less of a surprise if that cost is factored into your household’s monthly budget.

 

 

THIS WEEK

The Institute for Supply Management releases its monthly non-manufacturing PMI on Monday; investors will consider its latest reading and earnings from Avis Budget Group, Brighthouse Financial, CNA, Invacare, Kemper, Loews, Marriott International, Mosaic, Rent-A-Center, Sysco, and Valvoline. | Earnings appear Tuesday from Archer Daniels Midland, Bausch Health, Boise Cascade, CVS Health, Eli Lilly, Etsy, Frontier Communications, GoDaddy, Martin Marietta, Papa John’s, Planet Fitness, Ralph Lauren, and Wendy’s. | Wednesday, earnings news emerges from Coty, Dean Foods, Dish Network, Green Dot, Groupon, Horizon Pharma, Hostess Brands, Humana, Keurig Dr. Pepper, Marathon Oil, Michael Kors, Monster Beverage, News Corp., Office Depot, Prudential Financial, Qualcomm, Rockwell Automation, Roku, Sempra Energy, Square, Sunoco, Take-Two Interactive, TiVo, TripAdvisor, and Twenty-First Century Fox. | The Federal Reserve makes an interest rate decision on Thursday, when Activision Blizzard, AMC Entertainment, AstraZeneca, D.R. Horton, Discovery, Dropbox, Hertz Global Holdings, Icahn Enterprises, Lions Gate Entertainment, Redfin, Unisys, Walt Disney Co., and Yelp all present earnings. | The University of Michigan releases its initial consumer sentiment index for November on Friday, complementing the latest wholesale inflation data from the federal government and earnings news from GNC Holdings and Starwood Properties.

 

 

Q U O T E   O F   T H E   W E E K

Creativity can solve almost any problem. The creative act, the defeat of habit by originality, overcomes everything.”

George Lois

 

Sources: wsj.com, bigcharts.com, treasury.gov – 11/2/184,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

T H E   W E E K L Y   R I D D L E

It floats when born, lies down when alive, and runs as it dies. What is it?

 

LAST WEEK’S RIDDLE: In a thousand years, you will never find it. In a minute, you will notice it once. In a moment, you will see it twice. What is it?

ANSWER: The moon.

 

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – tinyurl.com/y72kqpoj [11/2/18]

2 – investing.com/economic-calendar/ [10/24/18]

3 – briefing.com/investor/calendars/economic/2018/10/29-02 [11/2/18]

4 – markets.wsj.com/us [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F2%2F17&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F2%2F17&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F2%2F17&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F1%2F13&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F1%2F13&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F1%2F13&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F3%2F08&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F3%2F08&x=0&y=0 [11/2/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F3%2F08&x=0&y=0 [11/2/18]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [11/2/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [11/2/18]  

 

 

Weekly Economic Update 10-29-18

In this week’s recap: a first-rate Q3 GDP reading, mixed housing indicators, slightly weaker household sentiment, and a significant retreat for equities.

 

FIRST ESTIMATE OF Q3 GDP: 3.5%

A 4.0% gain in consumer spending and a 3.3% advance in government spending helped strengthen the economy in the three months ending in September. Bureau of Economic Analysis data shows that the past two quarters represent the best 6-month period for U.S. growth since 2014. It appears likely that the economy will expand more than 3% this year; if that happens, 2018 will enter the history books as the best year for the economy since 2005.1

 

NEW HOME SALES SLUMP, BUT PENDING HOME SALES IMPROVE

According to the Census Bureau, new home buying decreased 5.5% last month, even as the number of new homes on the market hit a nine-and-a-half-year high. The median sale price of $320,000 was 3.5% lower than it was in September 2017. Pending home sales surprised to the upside in September: they rose 0.5%. Economists polled by Briefing.com expected the National Association of Realtors to announce a housing contract activity decline of 0.3%.2,3

 

A SLIGHT DIP FOR CONSUMER SENTIMENT

Friday, the final University of Michigan consumer sentiment index for October appeared, bearing a reading of 98.6. This was 0.4 points below its preliminary October mark, but little cause for concern.3

 

MORE TURBULENCE ON WALL STREET

Investors would love to see the major indices recapture some of their October losses, and perhaps that will happen as the month ends. The Dow Industrials, S&P 500, and Nasdaq Composite all retreated significantly last week after five days of sizable ups and downs, as anxieties about reduced profit margins and rising interest rates lingered. The blue chips gave back 2.97% to settle at 24,688.31 Friday. Losing 3.78% for the week, the Nasdaq fell to 7,167.21 at Friday’s closing bell; across the same stretch, the S&P 500 slipped 3.94% to 2,658.69.4

 

 

T I P   O F   T H E   W E E K
If you have adult children living with you, it is perfectly fine to ask them to shoulder some financial responsibility in your household. Ask them to regularly pay one expense a month (such as the electric bill) or have them pay rent.

 

 

THIS WEEK

Monday, the Department of Commerce presents its snapshot of September personal spending, and the September PCE price index appears; investors will also consider earnings from Akamai, Blackbaud, Bloomin’ Brands, Booz Allen Hamilton, Embraer, Mondelez, Nautilus, Transocean, U.S. Auto Parts, and Wingstop. | Tuesday, Wall Street reviews earnings from Aetna, Allergan PLC, Amgen, Anadarko Petroleum, AutoNation, Baidu, Baker Hughes, Big 5 Sporting Goods, BP, Brinker International, Coca-Cola, Container Store, Cummins, Curtiss Wright, Denny’s, Eaton, eBay, Edison International, Electronic Arts, Extra Space Storage, Facebook, Fiat Chrysler, Fresh Del Monte Produce, GE, Genworth Financial, Herbalife, Honda Motor Co., Huntsman, Hyatt Hotels, Mastercard, MGM Resorts, Pfizer, Public Storage, Regis Corp., Sony, Under Armour, Voya Financial, Vulcan Materials, Waddell & Reed, WestJet, and Wyndham Hotels & Resorts; the latest Conference Board consumer confidence index and Case-Shiller home price index also arrive. | On Wednesday, the corporations announcing earnings include Air Canada, Allstate, AIG, Anthem, Chesapeake Energy, Clorox, Diebold Nixdorf, Estee Lauder, Express Scripts, Fitbit, Garmin, General Motors, GlaxoSmithKline, Kellogg, Molson Coors, Sprint, Taylor Morrison, Yum! Brands, and Zynga, and ADP releases its September payrolls report. | The October ISM manufacturing PMI comes out Thursday, along with the September Challenger job-cut report, the latest initial unemployment claims numbers, and earnings from AMC Networks, Apple, Arcelor Mittal, Avon, CBRE Group, CBS, Cigna, Cirrus Logic, DowDuPont, Exelon, Fluor, GoPro, Hanesbrands, Kraft Heinz, Live Nation, Marathon Petroleum, MetLife, Motorola Solutions, Pitney Bowes, RE/MAX Holdings, Royal Dutch Shell, Shake Shack, Spotify, Starbucks, Symantec, U.S. Steel, Wayfair, and WW. | Friday, the Department of Labor issues its October employment report, and Alibaba, Chevron, Duke Energy, Enbridge, Exxon Mobil, Seagate Technology, and Willis Towers Watson offer earnings news.

 

 

Q U O T E   O F   T H E   W E E K

Education is the ability to listen to almost anything without losing your temper or your self-confidence.”

Robert Frost

 

Sources: wsj.com, bigcharts.com, treasury.gov – 10/26/184,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

T H E   W E E K L Y   R I D D L E

In a thousand years, you will never find it. In a minute, you will notice it once. In a moment, you will see it twice. What is it?

 

LAST WEEK’S RIDDLE: It is removed from mines outside the U.S., then encased in wood, never to be released. Even so, it is still used by millions. What is it?

ANSWER: Graphite (pencil lead).

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

 

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

 

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – marketwatch.com/story/third-quarter-gdp-cools-a-bit-to-a-still-solid-35-rate-2018-10-26 [10/26/18]

2 – bloomberg.com/news/articles/2018-10-24/u-s-new-home-sales-fall-more-than-forecast-to-least-since-2016 [10/24/18]

3 – briefing.com/investor/calendars/economic/2018/10/22-26 [10/26/18]

4 – markets.wsj.com/us [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F26%2F17&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F25%2F13&x=0&y=0 [10/26/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F27%2F08&x=0&y=0 [10/26/18]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/26/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/26/18]  

Tolerate the Turbulence

Look beyond this moment and stay focused on your long-term objectives.

Volatility will always be around on Wall Street, and as you invest for the long term, you must learn to tolerate it. Rocky moments, fortunately, are not the norm.

Since the end of World War II, there have been dozens of Wall Street shocks. Wall Street has seen 56 pullbacks (retreats of 5-9.99%) in the past 73 years; the S&P index dipped 6.9% in this last one. On average, the benchmark fully rebounded from these pullbacks within two months. The S&P has also seen 22 corrections (descents of 10-19.99%) and 12 bear markets (falls of 20% or more) in the post-WWII era.1

Even with all those setbacks, the S&P has grown exponentially larger. During the month World War II ended (September 1945), its closing price hovered around 16. At this writing, it is above 2,750. Those two numbers communicate the value of staying invested for the long run.2

This current bull market has witnessed five corrections, and nearly a sixth (a 9.8% pullback in 2011, a year that also saw a 19.4% correction). It has risen roughly 335% since its beginning even with those stumbles. Investors who stayed in equities through those downturns watched the major indices soar to all-time highs.1

As all this history shows, waiting out the shocks may be highly worthwhile. The alternative is trying to time the market. That can be a fool’s errand. To succeed at market timing, investors have to be right twice, which is a tall order. Instead of selling in response to paper losses, perhaps they should respond to the fear of missing out on great gains during a recovery and hang on through the choppiness.

After all, volatility creates buying opportunities. Shares of quality companies are suddenly available at a discount. Investors effectively pay a lower average cost per share to obtain them.

Bad market days shock us because they are uncommon. If pullbacks or corrections occurred regularly, they would discourage many of us from investing in equities; we would look elsewhere to try and build wealth. A decade ago, in the middle of the terrible 2007-09 bear market, some investors convinced themselves that bad days were becoming the new normal. History proved them wrong.

As you ride out this current outbreak of volatility, keep two things in mind. One, your time horizon. You are investing for goals that may be five, ten, twenty, or thirty years in the future. One bad market week, month, or year is but a blip on that timeline and is unlikely to have a severe impact on your long-run asset accumulation strategy. Two, remember that there have been more good days on Wall Street than bad ones. The S&P 500 rose in 53.7% of its trading sessions during the years 1950-2017, and it advanced in 68 of the 92 years ending in 2017.3,4

Sudden volatility should not lead you to exit the market. If you react anxiously and move out of equities in response to short-term downturns, you may impede your progress toward your long-term goals.

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

Citations.

1 – marketwatch.com/story/if-us-stocks-suffer-another-correction-start-worrying-2018-10-16 [10/16/18]

2 – multpl.com/s-p-500-historical-prices/table/by-month [10/18/18]

3 – crestmontresearch.com/docs/Stock-Yo-Yo.pdf [10/18/18]

4 – icmarc.org/prebuilt/apps/downloadDoc.asp [2/18]

 

Weekly Economic Update 10-22-18

In this week’s recap: home sales lag, retail sales barely improve, new Fed minutes discuss staying the course, and major equity indices advance.

HOMES MOVE AT THE SLOWEST PACE IN 3 YEARS

Existing home sales slumped 3.4% in September as the annualized sales rate decelerated to a degree unseen since November 2015. In reporting this, the National Association of Realtors cited the usual factors: climbing mortgage rates, tight inventory, and ascending prices (the median sale price in September was $258,100, up 4.2% in 12 months). The NAR’s chief economist, Lawrence Yun, now projects a 1.6% reduction in resales for 2018; economists at Fannie Mae are forecasting a 2.0% retreat. In other real estate news, the Census Bureau said that housing starts fell 5.3% last month, while building permits declined 0.6%.1,2

    

AGAIN, RETAIL SALES RISE JUST 0.1%

The Census Bureau said that the overall gain for September matched that of August. With fuel and auto sales factored out, retail sales were flat last month. Core sales retreated 0.1%.2

 

FED MINUTES NOTE POSSIBILITY OF FURTHER GRADUAL RATE HIKES

The Federal Reserve released minutes from its September policy meeting Thursday, and they relayed the consensus opinion that a “gradual approach” to tightening monetary policy will be warranted if inflation, labor, and GDP readings keep indicating a thriving economy. Policymakers noted that raising rates too quickly could prompt “an abrupt slowing in the economy and inflation moving below the committee’s objective.” Then again, the minutes also acknowledged “the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances.”3

 

A POSITIVE WEEK FOR EQUITIES

All three major Wall Street benchmarks advanced last week. The S&P 500 registered the smallest gain, adding just 0.02% as it reached 2,767.78. Improving 0.41% for the week, the Dow Jones Industrial Average settled at 25,444.34. Rising 1.64% in five trading days, the Nasdaq Composite ended the week at 7,449.03.4

 

 

T I P   O F   T H E   W E E K


As a small business grows, a relationship with a good tax professional becomes vital. A thorough tax professional can help you file correctly and see that you take the deductions to which you are legally entitled.

 

 

THIS WEEK

Monday’s earnings calendar lists announcements from Halliburton, Hasbro, Kimberly-Clark, Lennox International, Sify, TD Ameritrade, and Zions Bancorp. | On Tuesday, earnings roll in from 3M, Ameriprise Financial, Avery Dennison, Biogen, Capital One, Caterpillar, Corning, Fifth Third, GATX, Harley-Davidson, JetBlue, Lockheed Martin, McDonald’s, NextEra Energy, Pulte Group, Quest Diagnostics, Regions Financial, Six Flags Entertainment, Texas Instruments, and Verizon. | Wall Street considers September new home sales data and a new Beige Book from the Federal Reserve on Wednesday, along with earnings from Aflac, AT&T, Boeing, CoreLogic, Ford Motor Co., Freeport-McMoRan, General Dynamics, Hilton Worldwide Holdings, Ingersoll Rand, Microsoft, Norfolk Southern, Northrop Grumman, O’Reilly Auto Parts, Raymond James, Sirius XM Holdings, Smith Micro, Visa, Whirlpool, and W.R. Grace. | Thursday, investors react to earnings from Alaska Air Group, Ally Financial, Alphabet, Altria Group, Amazon, American Airlines, Anheuser-Busch, Briggs & Stratton, Bristol-Myers, Celgene, Chipotle, Comcast, Conoco-Phillips, Discover, Dunkin’ Brands, Expedia, First Solar, Gilead Sciences, GrubHub, Hershey Co., IMAX, Intel, International Paper, Mattel, Merck, Netgear, Nokia, Penske Auto Group, Raytheon, Sherwin-Williams, Snap, Southwest Airlines, Stanley Black & Decker, Stryker, T. Rowe Price, The Hartford, Twitter, Union Pacific, Valero Energy, Verisign, Waste Management, and Western Digital, plus new initial jobless claims numbers, September pending home sales, and a new report on durable goods orders. | The federal government’s first estimate of Q3 GDP arrives Friday along with the final September University of Michigan consumer sentiment index and earnings announcements from AON, Charter Communications, Colgate-Palmolive, Goodyear, Phillips 66, Ryder Systems, and Weyerhaeuser.

 

 

Q U O T E   O F   T H E   W E E K

“The way you overcome shyness is to become so wrapped up in something that you forget to be afraid.”

Lady Bird Johnson

Sources: wsj.com, bigcharts.com, treasury.gov – 10/19/184,5,6,7

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

T H E   W E E K L Y   R I D D L E

It is removed from mines outside the U.S., then encased in wood, never to be released. Even so, it is still used by millions. What is it?

 

LAST WEEK’S RIDDLE: It gives you information and control, and without it, no work can be done – yet it costs you nothing. What is it?

ANSWER: Your brain.

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

 

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – marketwatch.com/story/existing-home-sales-slump-to-a-near-3-year-low-as-buyers-back-out-2018-10-19 [10/19/18]

2 – investing.com/economic-calendar/ [10/19/18]

3 – tickertape.tdameritrade.com/market-news/investors-seem-to-continue-digesting-fed-minutes-17062 [10/18/18]

4 – markets.wsj.com/us [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F19%2F17&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F18%2F13&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]
5 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]

5 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F20%2F08&x=0&y=0 [10/19/18]
6 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/19/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/19/18]  

Investing Means Tolerating Some Risk

That truth must always be recognized.

 

When financial markets have a bad day, week, or month, discomforting headlines and data can swiftly communicate a message to retirees and retirement savers alike: equity investments are risky things, and Wall Street is a risky place.

All true. If you want to accumulate significant retirement savings or try and grow your wealth through the opportunities in the markets, this is a reality you cannot avoid.

 

Regularly, your investments contend with assorted market risks. They never go away. At times, they may seem dangerous to your net worth or your retirement savings, so much so that you think about getting out of equities entirely.

If you are having such thoughts, think about this: in the big picture, the real danger to your retirement could be being too risk averse.

 

Is it possible to hold too much in cash? Yes. Some pre-retirees do. (Even some retirees, in fact.) They have six-figure savings accounts, built up since the Great Recession and the last bear market. It is a prudent move. A dollar will always be worth a dollar in America, and that money is out of the market and backed by deposit insurance.

This is all well and good, but the problem is what that money is earning. Even with interest rates rising, many high-balance savings accounts are currently yielding less than 0.5% a year. The latest inflation data shows consumer prices advancing 2.3% a year. That money in the bank is not outrunning inflation, not even close. It will lose purchasing power over time.1,2

 

Consider some of the recent yearly advances of the S&P 500. In 2016, it gained 9.54%; in 2017, it gained 19.42%. Those were the price returns; the 2016 and 2017 total returns (with dividends reinvested) were a respective 11.96% and 21.83%.3,4

Yes, the broad benchmark for U.S. equities has bad years as well. Historically, it has had about one negative year for every three positive years. Looking through relatively recent historical windows, the positives have mostly outweighed the negatives for investors. From 1973-2016, for example, the S&P gained an average of 11.69% per year. (The last 3-year losing streak the S&P had was in 2000-02.)5

Your portfolio may not return as well as the S&P does in a given year, but when equities rally, your household may see its invested assets grow noticeably. When you bring in equity investment account factors like compounding and tax deferral, the growth of those invested assets over decades may dwarf the growth that could result from mere checking or savings account interest. 

At some point, putting too little into investments and too much in the bank may become a risk – a risk to your retirement savings potential. At today’s interest rates, the money you are saving may end up growing faster if it is invested in some vehicle offering potentially greater reward and comparatively greater degrees of risk to tolerate.

 

Having a big emergency fund is good. You can dip into that liquid pool of cash to address sudden financial issues that pose risks to your financial equilibrium in the present.

 

Having a big retirement fund is even better. When you have one of those, you may confidently address the biggest financial risk you will ever face: the risk of outliving your money in the future.

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

Citations.

1 – valuepenguin.com/average-savings-account-interest-rates [10/4/18]

2 – investing.com/economic-calendar/ [10/11/18]

3 – money.cnn.com/data/markets/sandp/ [10/11/18]

4 – ycharts.com/indicators/sandp_500_total_return_annual [10/11/18]

5 – thebalance.com/stock-market-returns-by-year-2388543 [6/23/18]

Weekly Economic Update 10-15-18

In this week’s recap: more downward pressure on equities, retiree incomes get a boost, yearly inflation declines, and consumer sentiment misses expectations.

UNCERTAINTY BREEDS SELLING, FOLLOWED BY A RELIEF RALLY

On Friday, Wall Street rebounded from a disquieting slump that saw the blue chips take an almost 1,400 point dive. The S&P 500 gained 1.42% to snap a 6-session losing streak, the Nasdaq Composite rose 2.29% to fight back from a correction, and the Dow rose 1.15%. A new earnings season may take investors’ minds off the insecurities they have felt recently about bond yields, tariffs, and interest rate hikes. Those uncertainties weighed on equities again this past week: the Dow fell 4.19% to 25,339.99; the S&P, 4.10% to 2,767.13; the Nasdaq, 4.86% to 7,496.89. Small caps had it worse than the big three last week: the Russell 2000 lost 5.23%.1,2

 

INFLATION SOFTENED LAST MONTH

Advancing only 0.1% for September, the headline Consumer Price Index showed a yearly gain of 2.3%, quite a contrast from the 2.9% increase measured in July. The core CPI also advanced 0.1%, and its 12-month gain was unchanged at 2.2%. If further deceleration in the annual inflation rate occurs, that might give the Federal Reserve some pause.3

 

A LITTLE LESS CONFIDENCE ON MAIN STREET

The latest University of Michigan consumer sentiment index fell short of the heights forecast by economists surveyed by Briefing.com. They expected a preliminary October reading of 100.0. Instead, the index fell to 99.0, 1.1 points below its final September mark.4

 

SOCIAL SECURITY BENEFITS WILL GROW 2.8% IN 2019

Retirees will soon see a boost in their Social Security payments. Thursday, the Social Security Administration announced that retirement benefits will receive their largest cost-of-living adjustment (COLA) since 2012 next year. The improvement will lift the average monthly payment to an individual from $1,422 to $1,461. The mean monthly payment to a retired couple will rise from $2,381 to $2,448.5

 

 

T I P   O F   T H E   W E E K


Looking for more money to save or invest? You may find it by eating out less. If you spend $300 a month eating out, you could lower that to $100 a month and free up $2,400 a year to put into a retirement account or emergency fund.

 

 

THIS WEEK

On Monday, Bank of America reports Q3 results and the Census Bureau releases its latest monthly retail sales snapshot. | BlackRock, Comerica, CSX, Del Taco, Domino’s, J.B. Hunt, IBM, Infosys, Johnson & Johnson, Morgan Stanley, Netflix, UnitedHealth, and W.W. Grainger all announce earnings Tuesday. | Minutes from the Federal Reserve’s September policy meeting surface Wednesday, along with data on September housing starts and building permits and earnings from Abbott Labs, Alcoa, Kaiser Aluminum, Kinder Morgan, Northern Trust, Union Bank, U.S. Bank, United Rentals, and Winnebago. | American Express, Bank of New York Mellon, BB&T, Blackstone Group, Celanese, E*Trade, KeyCorp, Novartis, Nucor, PayPal, Philip Morris, Snap-On, Sonoco, Textron, Travelers Companies, and WD40 present earnings Thursday, when the latest initial jobless claims figures also appear. | Friday, Honeywell, Manpower, Procter & Gamble, Schlumberger, State Street, SunTrust, VF Corporation, and Volvo offer earnings news, and September existing home sales data emerges from the National Association of Realtors.

 

 

Q U O T E   O F   T H E   W E E K

“The most important thing in life is to learn how to give out love and how to let it come in.

MITCH ALBOM

 

Sources: wsj.com, bigcharts.com, treasury.gov – 10/12/182,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

T H E   W E E K L Y   R I D D L E

It gives you information and control, and without it, no work can be done – yet it costs you nothing. What is it?

 

LAST WEEK’S RIDDLE: They can pass through state after state, all while never moving. What are they?

ANSWER: Interstate highways.

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

 

Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – thestreet.com/markets/stocks-on-wall-street-rebound-friday-14742963 [10/12/18]

2 – markets.wsj.com/us [10/12/18]

3 – marketwatch.com/story/housing-costs-nudge-inflation-higher-in-september-cpi-shows-2018-10-11 [10/11/18]

4 – briefing.com/investor/calendars/economic/2018/10/08-12 [10/12/18]

5 – kiplinger.com/article/retirement/T051-C001-S001-social-security-benefits-to-increase-in-2019.html [10/11/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F12%2F17&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F12%2F17&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F12%2F17&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F11%2F13&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F11%2F13&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F11%2F13&x=0&y=0 [10/12/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F13%2F08&x=0&y=0 [10/12/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F13%2F08&x=0&y=0 [10/12/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F13%2F08&x=0&y=0 [10/12/18]

7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/12/18]

8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/12/18]  

 

Taking a Loan from Your Retirement Plan = Bad Idea

Why you should refrain from making this move.

Thinking about borrowing money from your 401(k), 403(b), or 457 account? Think twice about that because these loans are not only risky, but injurious, to your retirement planning.

   

A loan of this kind damages your retirement savings prospects. A 401(k), 403(b), or 457 should never be viewed like a savings or checking account. When you withdraw from a bank account, you pull out cash. When you take a loan from your workplace retirement plan, you sell shares of your investments to generate cash. You buy back investment shares as you repay the loan.1

In borrowing from a 401(k), 403(b), or 457, you siphon down invested retirement assets, leaving a smaller account balance that experiences a smaller degree of compounding. In repaying the loan, you will likely repurchase investment shares at higher prices than in the past – in other words, you will be buying high. None of this makes financial sense.1

Most plan providers charge an origination fee for a loan (it can be in the neighborhood of $100), and of course, they charge interest. While you will repay interest and the principal as you repay the loan, that interest still represents money that could have remained in the account and remained invested.1,2

As you strive to repay the loan amount, there may be a financial side effect. You may end up reducing or suspending your regular per-paycheck contributions to the plan. Some plans may even bar you from making plan contributions for several months after the loan is taken.3,4

 

Your take-home pay may be docked. Most loans from 401(k), 403(b), and 457 plans are repaid incrementally – the plan subtracts X dollars from your paycheck, month after month, until the amount borrowed is fully restored.1

 

If you leave your job, you will have to pay 100% of your 401(k) loan back. This applies if you quit; it applies if you are laid off or fired. Formerly, you had a maximum of 60 days to repay a workplace retirement plan loan. The Tax Cuts & Jobs Act of 2017 changed that for loans originated in 2018 and years forward. You now have until October of the year following the year you leave your job to repay the loan (the deadline is the due date of your federal taxes plus a 6-month extension, which usually means October 15). You also have a choice: you can either restore the funds to your workplace retirement plan or transfer them to either an IRA or a workplace retirement plan elsewhere.2

If you are younger than age 59½ and fail to pay the full amount of the loan back, the I.R.S. will characterize any amount not repaid as a premature distribution from a retirement plan – taxable income that is also subject to an early withdrawal penalty.3

Even if you have great job security, the loan will probably have to be repaid in full within five years. Most workplace retirement plans set such terms. If the terms are not met, then the unpaid balance becomes a taxable distribution with possible penalties (assuming you are younger than 59½.1

 

Would you like to be taxed twice? When you borrow from an employee retirement plan, you invite that prospect. You will be repaying your loan with after-tax dollars, and those dollars will be taxed again when you make a qualified withdrawal of them in the future (unless your plan offers you a Roth option).3,4

 

Why go into debt to pay off debt? If you borrow from your retirement plan, you will be assuming one debt to pay off another. It is better to go to a reputable lender for a personal loan; borrowing cash has fewer potential drawbacks.  

 

You should never confuse your retirement plan with a bank account. Some employees seem to do just that. Fidelity Investments says that 20.8% of its 401(k) plan participants have outstanding loans in 2018. In taking their loans, they are opening the door to the possibility of having less money saved when they retire.4

Why risk that? Look elsewhere for money in a crisis. Borrow from your employer-sponsored retirement plan only as a last resort.

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

Citations.

1 – gobankingrates.com/retirement/401k/borrowing-401k/ [10/7/17]

2 – forbes.com/sites/ashleaebeling/2018/01/16/new-tax-law-liberalizes-401k-loan-repayment-rules/ [1/16/18]

3 – cbsnews.com/news/when-is-it-ok-to-withdraw-or-borrow-from-your-retirement-savings/ [1/31/17]

4 – cnbc.com/2018/06/26/the-lure-of-a-401k-loan-could-mask-its-risks.html [6/26/18]

 

Weekly Economic Update 10-8-18

In this week’s recap: stocks slump as the 10-year Treasury yield spikes, an ISM index hits a historic peak, job creation weakens, and oil extends its winning streak.

10-YEAR TREASURY YIELD HITS A 7-YEAR PEAK

Friday, the yield on the 10-year note reached 3.23%, its highest level since 2011. Its yield rose dramatically last week, influenced by hawkish comments from Federal Reserve chair Jerome Powell and reports showing minimal unemployment and a swiftly expanding business sector. All this strengthened investor perception that the U.S. economy has hit its stride. It also suggested a near future with recurring interest rate hikes, costlier borrowing, and subdued spending. That possibility weighed on equities. For the week, the Nasdaq Composite fell 3.21% to 7,788.45, and the S&P 500, 0.97% to 2,885.57; the Dow Industrials retreated just 0.04% to 26,447.05.1,2

 

LESS HIRING IN SEPTEMBER

A look at the Department of Labor’s latest jobs report reveals good news and bad news. The good news? Unemployment declined further to 3.7%, annualized wage growth improved to 3.4% in the third quarter, and monthly net hiring averaged 190,000 in Q3. The bad news? Payrolls expanded with just 134,000 net new jobs last month, as underemployment ticked up 0.1% to 7.5% and year-over-year wage growth slowed to 2.8%. Some economists feel that Hurricane Florence significantly impacted the September data.3

 

SERVICE SECTOR EXPANDS AT A HISTORIC PACE

The Institute for Supply Management said its non-manufacturing purchasing manager index rose 3.1 points in September to 61.6. It has never been that high in its decade-long history. ISM’s PMI for the factory sector took a slight dip in September, slipping from 61.3 to 59.8 but still showing fast expansion.4

 

OIL MAKES ANOTHER WEEKLY ADVANCE

Crude is on a 4-week winning streak. At Friday’s closing bell, the price stood at $74.34 a barrel on the NYMEX, reflecting a 1.5% rise in five days. Again, worries over upcoming U.S. sanctions against Iran helped to send prices higher. WTI crude settled at $76.41 Wednesday, which approached a 4-year peak for the commodity.5

 

 

T I P   O F   T H E   W E E K
Yes, clipping coupons can save you money at the grocery store – but keep in mind, coupon deals may lead you to buy unneeded items. The cost of the extra purchases could cancel out any coupon savings.

 

 

THIS WEEK

While the U.S. bond market is closed Monday in observance of Columbus Day, U.S. stock exchanges are open for business; no major economic or earnings releases are scheduled. | Nothing major is slated for Tuesday, either. | Wednesday, investors consider the September Producer Price Index and earnings from Fastenal. | On Thursday, the September Consumer Price Index appears, along with the latest initial jobless claims report and earnings news from Delta Air Lines and Walgreens Boots Alliance. | The fall earnings season begins Friday, with announcements from Citigroup, JPMorgan Chase, PNC Financial Services Group, and Wells Fargo; in addition, the University of Michigan’s preliminary October consumer sentiment index arrives.

 

 

Q U O T E   O F   T H E   W E E K

Success is the maximum utilization of the ability that you have.”

Zig Ziglar

 

Sources: wsj.com, bigcharts.com, treasury.gov – 10/5/182,6,7,8

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

 

 

T H E   W E E K L Y   R I D D L E

They can pass through state after state, all while never moving. What are they?

 

LAST WEEK’S RIDDLE: What can be broken, but should not be forgotten?

ANSWER: A promise.

 

 

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

 

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Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor’s 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world’s largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 – thestreet.com/markets/stocks-rise-slightly-on-friday-after-september-jobs-report-14735092 [10/5/18]

2 – markets.wsj.com/us [10/5/18]

3 – bloomberg.com/news/articles/2018-10-05/u-s-payrolls-and-wages-cool-while-jobless-rate-hits-48-year-low [10/5/18]

4 – instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?navItemNumber=30177 [9/26/18]

5 – marketwatch.com/story/us-oil-benchmark-ends-nearly-flat-but-tallies-a-4th-straight-weekly-rise-2018-10-05 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F5%2F17&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F4%2F13&x=0&y=0 [10/5/18]

6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=10%2F6%2F08&x=0&y=0 [10/5/18]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [10/5/18]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [10/5/18]  

 

Smart Financial & Insurance Moves for New Parents

As you start a family, consider these ideas.

Being a parent means being responsible to a degree you never have been before.

That elevated responsibility also impacts your financial decisions. You are now a provider and a protector, and that reality may make the following financial moves necessary.

Think about a budget.

As a couple, you may have lived for years without budgeting. As parents, this may change. You will face new recurring costs: clothes, toys, diapers, food. Keeping track of weekly or monthly expenses will be handy. (The Department of Agriculture has an online calculator where you can estimate the total cost of raising a child to adulthood. The math may surprise you: the U.S.D.A. puts the average cost at $233,610 for a middle-income family.)1,2

Take care of health and life insurance.

Your child should be added to your health insurance plan quickly. Most insurance providers require you to notify them of a child’s birth within 30 days. You can get started before then; be aware that a Social Security number and birth certificate can take weeks to arrive in the mail. If you are in a group health plan, talk with the human resources officer or benefits administrator at work, and let them know that you want to add a dependent to your health care plan. (If you have coverage through a private plan, your premiums may go up after you notify the carrier.) Under the Affordable Care Act, a parent or legal guardian who has health coverage arranged through the federal or state Marketplace has 60 days from the date of birth or adoption to enroll a child as a dependent on their plan; once that is done, health care coverage for the child will apply, retroactively.3

Term life insurance provides an affordable way for new parents to have some financial insulation against a worst-case scenario, and disability insurance (which may be available where you work) provides coverage in the event of an extended illness or injury that stops you from doing your job. If you have a Health Savings Account (HSA), you can contribute more per year when you have a child. The maximum annual contribution for a family is currently set at $6,850 (and for the record, the I.R.S. is allowing families to contribute up to $6,900 in 2018).4

Draft a will and review beneficiary designations.

A will can do more than declare who receives your assets when you die. It can also name a legal guardian for your child in the event both parents pass away. Additionally, you can specify a guardian of your estate in your will, to manage the assets left to a minor child. While you may have named your spouse or partner as the primary beneficiary of your IRA or investment account, you may decide to change that or at least add your child as a contingent beneficiary.5

See if you can save a little for college.

The estimated cost of four years at a public university starting in 2036? $184,000, CNBC reports. That may convince you to open a 529 plan or have some other kind of dedicated college savings account with investment options. Most 529 plans require a Social Security number for a beneficiary, so they are commonly started after a child is born, rather than before.2,6

Review your withholding status and tax forms.

An addition to your family means changes. You may also become eligible for some federal tax breaks, like the Earned Income Tax Credit, the Adoption Tax Credit, the Child Tax Credit, and the Child & Dependent Care Credit.7

Keep the big picture in mind.

You still need to build retirement savings; you still need to have an emergency fund. Becoming a family might make accomplishing those tasks harder, yet they remain just as important.

After reading all this, you may feel like you need to be a millionaire to raise a child. The fact is, most parents are not millionaires, and they manage. Whether you are wealthy or not, you will want to take care of many or all of these financial and insurance essentials before or after you bring your newborn home.

Gregg A Hancock Jr.

Vice President SENB Wealth Management

Trust Business Development Officer

SENB Wealth Management

309-517-5122

wealthmanagement@senb.com

www.senb.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Please Note: Investment products provided by SENB Wealth Management are not FDIC insured, are not obligations of, deposits of, or guaranteed by any financial institution, involve Investment risk, Including the possible loss of principal amount invested, are not insured by any federal government agency.

Citations.

1 – cnpp.usda.gov/tools/CRC_Calculator/default.aspx [9/20/18]

2 – tinyurl.com/y8rlmm7w [2/26/18]

3 – healthcare.com/info/health-insurance/baby-health-insurance-newborn [10/18/17]

4 – tinyurl.com/ya5g75ez [5/1/18]

5 – everplans.com/articles/what-does-a-guardian-of-the-estate-do [9/20/18]

6 – cnbc.com/2018/05/07/this-is-how-much-parents-need-to-save-to-cover-college-bills-in-2036.html [5/7/18]

7 – efile.com/tax-deductions-credits-for-parents-with-children-dependents/ [9/20/18]