I just received some bad news regarding a friend and client. His name is Ben and he is one of the good guys. I hope for the best, but your prayers would be appreciated. He was diagnosed with stage 4 lung cancer and is undergoing treatment. It seems to be localized to his lungs. I’ve never asked for a prayer chain, nor professed my faith this publicly. However, if you pray, if you have a prayer chain, please include Ben. That he would be cured. Pray for his comfort, strength, and his wife, Linda's strength.
With the announcement from Jerome Powell, Federal Reserve Chair, that the Fed has changed to a “wait and see” stance on the Fed Rate for the remainder of 2019, we have made some investment model changes that you will notice on your next statement. Citing the lowest job growth since 2017 and a respite from the inflation concerns, Chairman Powell has announced a unanimous vote from the Federal Open Market Committee (FOMC) to maintain rates for the rest of the year – currently 2.25% to 2.5%.
The most significant change in the WMP models is the release
For seven weeks, a dozen exceptional high school students worked tirelessly to raise money to fight blood cancers. As a group, the Student of the Year (SOY) 2019 class raised $182,259. The winner set a new SOY fundraising record with $65,507.50. Over seven weeks, that new record holder (and her motivated, talented team) organized more than 20 fundraising events, boldly approached and met with business owners and potential donors with poise that few high school students have yet developed. The organizational skill, effort and commitment required to set a new fundraising record for SOY Central PA is hard to fathom, but easy to appreciate and admire.
Congratulations Katie Hanshaw for being named the 2019 Central PA Student of the Year by raising $65,507.50 to help find a cure for leukemia, lymphoma and all blood cancers. She also collected the coveted 2019 SOY Citizenship Award, and earned the right to name a research grant.
As I notice that two of my clients turn 70 today, I am reminded of two planning opportunities that are worth mentioning. Each became more useful after the new tax bill went into effect on January 1st of this year. With strategies that aren’t particularly new, two changes in the tax code: the increase of the standard deduction, and the lowering of overall rates have opened new windows of opportunity
Roth IRA Conversions
With the lure of tax-free distributions, Roth IRAs have become popular retirement savings vehicles. According to the 2017 Investment Company Fact Book, about 17.4% of U.S. households owned Roth IRAs in 2016. One way to fund a Roth IRA is to convert some or all of your IRA or retirement plan money to a Roth IRA.
Roth IRAs — background
There are three ways to fund a Roth IRA — you can contribute directly, you can convert all or part of a traditional IRA to a Roth IRA, or you can roll funds over from an eligible employer retirement plan.
Monte Carlo Analysis
When you sit down with a financial professional to update your retirement plan, you may encounter a Monte Carlo simulation, a financial forecasting method that has become more prevalent in the last few years. Monte Carlo financial simulations project and illustrate the probability that you'll reach your financial goals, and might help you make a more informed investment decision.
Estimating investment returns
All financial forecasts must account for variables like inflation rates and investment returns. The catch is that these variables have to be estimated, and the estimate used is key to a forecast's results. For example, a forecast that assumes stocks will earn an average of 4% each year for the next 20 years will differ significantly from a forecast that assumes an average annual return of 8% over the same period.
Estimating investment returns is particularly difficult. For example, the volatility of stock returns can make short-term projections almost meaningless. Multiple factors influence investment returns, including events such as natural disasters and terrorist attacks, which are unpredictable. So, it's important to understand how different forecasting methods handle uncertainty.
Monitoring Your Portfolio
You probably already know you need to monitor your investment portfolio and update it periodically. Even if you've chosen an asset allocation, market forces may quickly begin to tweak it. For example, if stock prices go up, you may eventually find yourself with a greater percentage of stocks in your portfolio than you want. If stock prices go down, you might worry that you won't be able to reach your financial goals. The same is true for bonds and other investments.
Do you have a strategy for dealing with those changes? You'll probably want to take a look at your individual investments, but you'll also want to think about your asset allocation. Just like your initial investing strategy, your game plan for fine-tuning your portfolio periodically should reflect your investing personality.
The simplest choice is to set it and forget it — to make no changes and let whatever happens happen. If you've allocated wisely and chosen good investments, you could simply sit back and do nothing. But even if you're happy with your overall returns and tell yourself, "if it's not broken, don't fix it," remember that your circumstances will change over time. Those changes may affect how well your investments match your goals, especially if they're unexpected. At a minimum, you should periodically review the reasons for your initial choices to make sure they're still valid.