A Brighter Financial Future

Consider talking to your kids or grandkids sooner, rather than later, about basic financial management.

May 1, 2018

A recent Money Matters on Campus survey revealed that more than 40% of new college students didn’t feel prepared to manage their money. Some were reluctant to even check their bank accounts for fear of what they might find. Clearly, some advice would be helpful.

Over 40% of new college students don’t feel prepared to manage their money.

Consider talking to your kids or grandkids sooner, rather than later, about basic financial management. These skills are much easier to learn before they become financially independent, as there are fewer financial factors to consider. Teaching them a few basic principles now will leave them better equipped to deal with more complicated matters down the road, such as mortgages, healthcare and tradeoffs that may need to be made in retirement.

Start with these five basics.

1. Determining how much money they have

Although most college students are more likely to consult an app than an actual paper bank statement, it’s essential that they understand what they’re looking at. Explain any unfamiliar terms, such as “posted” vs. “available” balance. This way, they’ll know exactly how much cash they have on hand.

2. Understanding credit and loan offers

College students are easy prey for predatory lending practices. Teach yours to recognize the differences between good offers and bad ones. While it’s important to establish a credit history, it’s even more important to understand how credit works and how to use it responsibly.

3. Distinguishing between wants and needs

Building a solid financial foundation requires understanding the difference between wants and needs. Since most young adults have had their needs taken care of by their parents, they’re used to spending their own money on wants. As they grow older, it’s crucial they learn to put needs before wants.

4. Establishing a simple budget

The sooner young adults learn to budget, the easier it will be to grasp the basic skills. Teach them the importance of developing a plan for their income, and how to prioritize. Perhaps help them build a spreadsheet or set up an app to track and categorize their expenses.

5. Thinking about tomorrow

Teach your kids to think beyond today, and encourage them to save for themselves, the future and others. It’s never too soon to save for retirement and to start thinking philanthropically. And everyone can use a rainy day fund to help get them through the unexpected.

Next Steps

• Make sure your kids have mastered financial basics by checking in with them from time to time
• Follow up on any new questions that may have surfaced after their initial money management attempts
• Help them quickly recognize when they need financial help, and where to turn for solutions

Source: Moneymanagement.org

Debunking Social Security Myths [INFOGRAPHIC]

Shine some light on these common misconceptions to help get the most from your hard-earned benefits.

April 24, 2018

Should you always file for Social Security as late as possible? Not necessarily. Read more about some common misconceptions:

Social Security Myths and Misconceptions

What you don't know about Social Security and what you can do about it.

April 24, 2018

There’s no doubt about it. Filing for Social Security can be daunting. There’s a ton of information – and misinformation – to weed through, as well as the need for some calculations based on several variables. Your benefits depend on your age, how long you’ve worked, what you earned, your marital status and number of dependents. Seems like you have to factor in everything but your IQ. So to help, we offer some common misconceptions as well as some guidance on ways to get the most from your hardearned retirement benefits.

Myth No. 1: Social Security won't be around when I need it.
While it’s true that your contributions go to current beneficiaries as opposed to an account reserved for you, Social Security continues to be replenished by younger, working Americans, as well as earned interest on its bond portfolio and income tax on benefits paid to higher-income retirees. However, the trustees have projected that any existing surplus could be depleted sometime between 2033 and 2037, if no further legislative action is taken. This could mean that future retirees may be paid some portion, between 75% and 80% for example, of the benefits promised, but not zero like many fear.

Myth No. 2: Social Security is all you need.
Somewhat paradoxically in light of Myth No. 1, more than half of Americans expect to fund their retirement entirely with Social Security. While benefits do get adjusted for cost of living increases, they were always intended to supplement, not replace, retirement savings. Retirees received an average of $1,404 in benefits for the month of December. Even if you live frugally, that amount likely will not be enough to account for all the variables you might encounter over a decades-long retirement. That’s why it’s important to do what you can to maximize all your retirement savings for as long as possible (think taking full advantage of your employer’s 401(k) match).

Myth No. 3: File as early as possible.
No one quite knows how long you’ll live past full retirement age (FRA), so some think you should collect as soon as you’re eligible. But that means permanently reducing benefits when the odds favor a longer lifespan for most of us. Your advisor can help you calculate your breakeven point based on your statistical life expectancy and your family history. Higher earning spouses, in particular, may want to delay as long as possible, not just to maximize their own benefits, but to ensure a higher payout for their widow or widower when the time comes. Surviving spouses are eligible for 100% of their spouse’s benefit.

Myth No. 4: File as late as possible.
We’re not trying to confuse you. For the vast majority of applicants, waiting past full retirement age to file makes the most sense financially. But there are conditions that warrant filing early, particularly if you need the extra income or if your health isn’t the best. On the other hand, retirees who want to have the most income during their prime years may want to file early, too. Should you change your mind, you can claim a do-over within the first year, but you have to pay back what you received. If longer than a year, you can voluntarily suspend your benefits at FRA and then earn delayed credits until age 70.

Myth No. 5: You'll lose benefits if you continue to work after filing a claim.
If you file before your normal retirement age and continue to work, your benefits will be temporarily reduced depending on how much you earn. But those benefits are merely delayed until full retirement age (FRA), not lost forever. Once you reach FRA, you’ll receive increased monthly payments to make up the difference. Plus, you may end up increasing your annual benefit because Social Security is based on your 35 highest years of income. 

Myth No. 6: You're out of luck if you've never worked outside the home.
It’s true that regular benefits are based on an employment record of at least 40 quarters. But those who haven’t worked for that long, or at all, can receive half of what a spouse or even an ex-spouse would receive (as long as you were married for at least 10 years and haven’t remarried). If you’re a surviving spouse, you may be eligible for full benefits on your spouse’s record. Even ex-spouses can claim full survivor benefits as long as you were married for more than 10 years and never remarried before he or she passed away. Of note: remarriage after age 60 does not prevent or stop entitlement to benefits for survivors – even ex-spouse survivors.

Myth No. 7: Follow advice from friends and family.
Filing for Social Security based entirely on advice from nonprofessionals may work just fine, but it may not help you maximize benefits, which could leave thousands of dollars at stake. Often a consultation with your financial advisor and an accountant can help determine the best strategy.

Sources: ssa.gov; investopedia.com; forbes.com; thefiscaltimes.com; marketwatch.com; cnnmoney.com

Thoughts on Trade

Brian S. Wesbury – Chief Economist

Robert Stein, CFA – Dep. Chief Economist

Strider Elass – Senior Economist

   When the report on international trade came out earlier this month, protectionists were up in arms.  Through February, the US’ merchandise (goods only, not services) trade deficit with the rest of the world was the largest for any two-month period on record.  “Economic nationalists” from both sides of the political aisle, think this situation is unsustainable.

   Meanwhile, some investors ran for the hills when President Trump started announcing tariffs on steel, aluminum, and other goods, thinking this was the reincarnation of the Smoot-Hawley tariffs that were a key ingredient of the Great Depression.

   We think the hyperventilating on both sides needs to stop. In general, nothing is wrong with running a trade deficit.  Many states run large and persistent trade imbalances with other states and, rightly, no one cares.  We, the authors, run persistent trade deficits with Chipotle and Chick-fil-A, and we’re confident these deficits are never going away.

    Running a trade deficit means the US gets to buy more than it produces.  In turn, we have this ability because investors from around the world think the US is a good place to put their savings, leading to a net capital inflow that offsets our trade deficit.  Notably, foreign investors are willing to invest here even when the assets they buy generate a low rate of return.  As a result, this process can continue indefinitely.

   It’s important to recognize that free trade enhances our standard of living even if other countries don’t practice free trade.  Let’s say China invents a cure for cancer and America invents a cure for Alzheimer’s.  If China refuses to give their people access to our cure, are we better off letting our people die of cancer?  Of course not!

Imposing or raising tariffs broadly would not help the US economy.  Nor would imposing tariffs on specific goods, like steel or aluminum.Giving some industries special favors will
only create demand for more special favors from others. It’ll grow the swamp, not drain it.

   All that said, we understand the frustration policymakers have with China, in particular, which has been levering access to its huge market to essentially steal foreign companies’ trade secrets and intellectual property.  It has a long-term track record of not respecting patents or trademarks.

    In theory, letting China into the World Trade Organization was supposed to stop this behavior.  But no company wants to bring a WTO case against China when it thinks China would respond by ending its access to their markets and letting in competitors who are more willing to be exploited.

    In addition – and this is very important – China is unlike any of our other trading partners in that it is a potential major military rival in the future.  There is a national security case to be made - even if one takes a libertarian position on free trade in general - that the US could accept a slightly lower standard of living by limiting trade with China, if the result is a lower standard of living for China as well.

   And China doesn’t have much room to fire back at recent US proposals (none of the tariffs targeted specifically at China have been implemented, by the way).  Last year, China exported $506 billion in goods to the US, while we only sent them $130 billion.

   That gives our policymakers room to raise tariffs on China much more than they can raise them on us.  If so, China would generate fewer earnings to turn into purchases of US Treasury debt.  Yet another reason for fear among bond investors.  However, don’t expect China to outright dump Treasury securities in any large amount.  They own our debt because it helps them back up their currency, not as a favor to the US.

   We’re certainly not advocating a trade war.  But an approach that focuses narrowly on China’s abusive behavior could pay dividends if it moves the world toward freer trade.    

"Click here to read more"

$15 Account Fee Credit for Going Paperless

April 16, 2018

Dear Client & Friends,

When you choose to go paperless and stop receiving your Raymond James statements, trade confirmations and account communications by mail, you’ll be doing more than just reducing clutter and saving trees – you can also save money. Beginning May 2018, you can get a $15 account fee credit when you choose online document delivery for accounts subject to any of the following:

·         Annual Account Maintenance Fee (charged annually in August)

·         Capital Access Fee (waived the first year, then charged annually on the account opening anniversary month)

·         Retirement Account Fee (charged annually on the account opening anniversary month)

How to get the credit

If your account is subject to one of the fees above, it can be eligible for the credit if it meets the following criteria:

·         You maintain online delivery for all account documents.

·         The account contains a minimum of $5,000 in cash or securities on its billing date.

·         At least $600 in deposits have been made in the account in the 12 months before the billing date.

How to elect paperless delivery

To elect paperless delivery of all documents, log in to Investor Access, visit the Account Services tab and select “Online viewing only” as the document delivery option for the account.

·         If you do not have an Investor Access login, visit raymondjames.com/investoraccess and click “Enroll in Investor Access” or contact me for assistance.

·         Note: If your account meets the criteria and you have already elected paperless delivery of your account documents, you will automatically receive this credit provided you maintain eligibility as outlined above.

Additional information

·         You can receive multiple $15 credits (one per account) if you elect paperless delivery on more than one eligible account.

·         Credit(s) will automatically renew and be applied annually if you continue to maintain eligibility.

·         It is important that you regularly check your document delivery email address in Investor Access to ensure it is current, valid and spelled correctly.

·         For your protection, Raymond James will reset your document delivery elections to all paper if you do not log in to Investor Access for more than six months, or if notifications sent to your email address are returned undeliverable more than once within 30 days. If the account is reset to paper delivery, you will not receive the credit.

·         This program does not apply to accounts already receiving fee waivers.

Just imagine – no more paperwork piling up or documents getting lost. Going paperless will mean better organization, greater security and saving money. And if you find that you need something on paper, just print it on demand.

Thank you, as always, for being a valued client. If you have any questions or would like to discuss this in more detail, please do not hesitate to give me a call.

Sincerely,

Matt Goodrich                                                  Larry Goodrich, CFP

President, Goodrich & Associates, LLC.         Vice President, Goodrich & Associates, Inc.

Branch Manager, RJFS                                      Branch Manager, RJFS                        

Raymond James Financial Services does not accept orders and/or instructions regarding your account by e-mail, voice mail, fax or any alternate method. Transactional details do not supersede normal trade confirmations or statements. E-mail sent through the Internet is not secure or confidential. Raymond James Financial Services reserves the right to monitor all e-mail.

Any information provided in this e-mail has been prepared from sources believed to be reliable, but is not guaranteed by Raymond James Financial Services and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation. Raymond James Financial Services and its employees may own option, rights or warrants to purchase any of the securities mentioned in this email. This e-mail is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this message in error, please contact the sender immediately and delete the material from your computer.

The Art of Giving

Thinking about donating your beloved collection of cars, art, antiques or jewelry? Keep these considerations in mind.

April 10, 2018

When it comes to giving generously, cash doesn’t have to be king. You can donate time, money, stocks, even property like your art or car collection. But why give away a collection you’ve built and enjoyed over the years? In some cases, your heirs may not be as passionate about your passion investments or hesitate to take on the upkeep of a sizeable collection. So you may consider donating the property instead of bequeathing it. The good news is that, in many cases, donating tangible property allows you to enjoy a tax deduction as well as the feeling of sharing something you love with others.

Of course, there are some IRS rules to consider, so it’s a good idea to talk to both your tax professional and financial advisor – as well as your designated charity and an appraiser – before donating your collection of art, antiques, collectibles, jewelry, vehicles or other tangible property.

Keep in mind, though, that collectibles generally come with ongoing expenses – for storage, insurance and maintenance. So, before you crate up the Van Goghs, consider:

Whether They Want It

Your family doesn’t want the collection, but who does? Current tax laws favor donations to public organizations that can make use of the items (e.g., art to museums and rare books to a university library). It’s called related use.

In order to maximize your charitable deduction benefits, the qualified organization must also be a public charitable organization. If you donate to a private foundation, you’ll likely be limited to deducting your cost basis rather than full fair market value, which may have increased since you purchased the pieces. Gifts to charity or donor advised funds for non-related use are deductible at the lesser of the cost basis or fair market value.

Before you wheel over your car collection, find out what kind of property your chosen charity is willing to accept and under what conditions. Museums may not be interested in the upkeep, storage and maintenance of vintage vehicles, for example. And they may only want the most important items in your collection. This may be a time to set aside your ego, look at your collection critically and decide if selling some of the lesser works might be better used to fund an endowment to preserve the remaining pieces for generations to come.

Whether You Can Relinquish Control

Think how hard it is to relinquish your favorite comfy chair to charity. It only gets harder when the items have considerable monetary value, too. You may be inclined to put some restrictions on how the property can be used (whether it must hang in the permanent collection or be included in the catalogue) or impose conditions on its future sale. However, retaining too much control could mean the transaction will no longer be considered a gift for tax purposes, or that the recipient may need court approval to change the terms of the agreement after you pass away. An unrestricted gift agreement between you and the donee is essential if your intention is to truly benefit the recipient.

Whether the Gift Is Worth What You Think

Valuations can be disputed, so get an independent, qualified appraisal for anything that may be worth more than $5,000. If the item’s value is less, there are several online sources to help you determine fair market value for your donated goods. Don’t forget to get a written receipt acknowledging the donation and its value. And if you’re donating something worth more than $50,000, ask the IRS for a Statement of Value before claiming it on your tax return.

Source: thetaxadvisor.com; artbusiness.com; Planned Giving Design Center

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

March's Market Noise Continues

Despite the market noise, a healthy backdrop exists for the U.S. equity markets and economy.

April 2, 2018

The market volatility we saw in early February persisted through March – and has now continued into the start of April. Since the S&P 500 peaked on January 26, the index moved at least 1% on a daily basis on half of the 43 trading days through the end of March.

“This contrasts to only one move of greater than 1% during 2018 prior to that peak and is a far cry from the calm seen in 2017, when the S&P 500 produced a 32-year volatility low with only eight days with moves of at least 1% for the full year,” shared Managing Director of Equity Portfolio & Technical Strategy Michael Gibbs.

However, a healthy backdrop for the U.S. equity markets exists amid all the recent market noise – and U.S. economic conditions remain quite healthy. In a recent Federal Open Market Committee (FOMC) press release, the Fed highlighted strengthening of their economic outlook. Growth in the remainder of the year is expected to be relatively strong, with an unclear impact from fiscal stimulus such as corporate tax cuts and increased spending.

Having raised short-term interest rates again on March 21, Fed officials are split in their expectations of whether there will be two or three more hikes this year. “Since December of 2015, including this month’s hike, the FOMC has raised rates six times for a total increase of 1.75%. Over the same time frame, the 10-year Treasury has risen only 0.55%, and we saw the Treasury yield curve flatten during the month,” explained Doug Drabik, senior vice president, Fixed Income Services Group.

The Fed expects inflation to drift gradually higher, while the unemployment rate is anticipated to fall to nearly a full percentage point below what it considers a long-term sustainable level in 2019 and 2020. However, the risks of a monetary policy error are increasing.

While well-intentioned, tariffs raise input costs, invite retaliatory tariffs on U.S. exports, disrupt supply chains and increase global investment uncertainty. “The bigger concern has been the reaction of our trading partners, which, to date, has been muted – giving rise to the hope the worst-case fears about a trade war are more likely not going to be realized,” according to Washington Policy Analyst Ed Mills. The financial markets have responded to a one-step back, one-step forward set of trade policy decisions.

"To read more please follow the link below"

http://www.raymondjames.com/pointofview/marchs-market-noise-continues?utm_source=hearsay&utm_medium=social&utm_campaign=market%20updates

Ignoring the Invisible Hand

Brian S. Wesbury – Chief Economist

Robert Stein, CFA – Dep. Chief Economist

Strider Elass – Senior Economist

     One of the most important questions we have about our country’s future is whether prosperity itself will make the American people lose sight of where that prosperity comes from; whether we’ll forget to cultivate the attitudes about freedom, property rights, and hard work that have made not only us great but also all the other places that have followed the same path.

     To be clear, this has nothing directly to do with who is president or which party controls Congress.  It has nothing to do with the tax cut passed late last year, or recent tariffs, or increases in federal spending, or red tape being cut or added.  Instead, it runs much deeper than that and will affect all of these issues over the very long term, multiple generations into the future. 

     The issue comes to mind for personal reasons, as a couple of us travel around the country with our high school juniors looking at colleges, hither and yon.

      We’re not here to shame any particular school, so we’re not going to name any.  But here’s what we notice on our visits:  at some point, the college admissions officers in charge of the meeting will talk about great accomplishments by students or recently-graduated alumni.  Invariably, the accomplishments are volunteer efforts of various sorts that help people in some far off land or, sometimes, here in the US.

      Don’t get us wrong, stories like this deserve to be told.  They’re important and worthy of honor.  But, not once, in all our collective college tours have we ever heard a school bring up someone who, say, grew up in tough circumstances, was maybe the first in their family to go to college, and has since gone on to become a very successful entrepreneur, investor, or key officer at a large company, like a CEO or CFO,…someone who has gone on to create wealth for their own family and others as well. 

     Not once. 

     Which is odd because we know these colleges must have tons of these stories to tell.  You can tell when you’re taking the tour after the admissions sessions when you walk through the campuses and see the dorms, classrooms, and athletic centers many of which are named after alumni who’ve cut enormous checks.

     Maybe stories of business-oriented success are just not on the radar of the kinds of people who run admissions offices.  Or, worse, maybe they think it’s embarrassing or that there should be some sort of shame associated with striving to generate wealth.  

     Either way, they seem out of touch with why so many of their students want to go to college in the first place.  “Making the world a better place” is not just about volunteer work; it’s about personal ambition and desire mixing with the invisible hand to raise the standard of living for everyone.         

     Capitalism isn’t a dirty word and the long-term success of our civilization means making sure our children know it.

"To read more please follow the link below"

https://www.ftportfolios.com/Commentary/EconomicResearch/2018/4/2/ignoring-the-invisible-hand

When Volatility is Just Volatility

Brian S. Wesbury – Chief Economist

Robert Stein, CFA – Dep. Chief Economist

Strider Elass – Economist

     Stock market volatility scares people.  But, volatility itself isn’t necessarily bad.  Only if there are fundamental economic problems, something that could cause a recession, would we think volatility itself is a warning sign.

      So, we watch the Four Pillars.  These Pillars – monetary policy, tax policy, spending & regulatory policy, and trade policy – are the real threats to prosperity.  Right now, these Pillars suggest that economic fundamentals remain sound.

     Monetary Policy:  We’re astounded some analysts interpreted last Wednesday’s pronouncements from the Federal Reserve as dovish.  The Fed upgraded its forecasts for economic growth, projected a lower unemployment rate through 2020 and also expects inflation to temporarily exceed its long-term inflation target of 2.0% in 2020.

      As recently as December, only four of sixteen Fed policymakers projected four or more rate hikes this year; now, seven of fifteen are in the more aggressive camp.  Some analysts dwell on the fact that the “median” policymaker still expects only three hikes in 2018, ignoring the trend toward a more aggressive Fed.

     But all of this misses the real point.  Monetary policy will still be loose at the end of 2018, whether the Fed raises rates three or four times this year.  The federal funds rate is about 120 basis points below the yield on the 10-year Treasury (which will rise as the Fed hikes), and is also well below the trend in nominal GDP growth.  Meanwhile, the banking system still holds about $2 trillion in excess reserves.  Monetary policy is a tailwind for growth, not a headwind. 

     Taxes:  The tax cut passed last year is the most pro-growth tax cut since the early 1980s, particularly on the corporate side.  Some analysts argue that the money is just going to be used for share buybacks, but we find that hard to believe.  A lower tax rate means companies have more of an incentive to pursue business ideas that they were on the fence about.

     And there is a big difference between who cuts a check to the government and who truly bears the burden of a tax, what economists call the “incidence of a tax.”

      Cutting the tax rate on Corporate America will lift the demand for labor, meaning workers and managers share the benefits with shareholders.  Yes, some of the tax cut will be used for share buybacks, but that’s OK with us; it means shareholders get money to reinvest in other companies.  Buybacks also move capital away from corporate managers who might otherwise squander the money on “empire building,” pursuing acquisitions for the sake of growth, when returning it to shareholders is more efficient.

     Spending & Regulation:  This pillar is a little shaky.  On regulation, Washington has moved aggressively to reduce red tape rather than expand it.  That’s good.  But, Congress can’t keep a lid on spending.  That’s bad.

      Back in June, the Congressional Budget Office was projecting that discretionary spending in Fiscal Year 2018 would be $1.222 trillion.  (Discretionary spending doesn’t include entitlements like Social Security, Medicare, or Medicaid, or net interest on the federal debt.)  Now, the CBO says that’ll reach $1.309 trillion, a gain of 7.1% in just nine months.

      Assuming the CBO got it right back in June on entitlements and interest, that would put this year’s federal spending at 20.9% of GDP, a tick higher than last year at 20.8% - despite faster economic growth.  This extra spending represents a shift in resources from the private sector to the government.  The more the government spends, the slower the economy grows.

     Trade:  Trade wars are not good for growth.  And the US move to put tariffs in place creates the potential for a trade war.  We aren’t dismissing this threat, but a “full blown” trade war remains a low probability event.

     The bottom line:  taxes, regulation and monetary policy are a plus for growth, spending and new tariffs are threats.  Things aren’t perfect, but, in no way do the fundamentals signal major economic problems ahead.  The current volatility in markets is not a warning, it’s just volatility.  

"Please follow the link below for further information"

https://www.ftportfolios.com/Commentary/EconomicResearch/2018/3/26/when-volatility-is-just-volatility

Playing Parent to Your Parents

Should the time come, you may need to step in to help preserve your parents' lifestyle and legacy.

March 27, 2018

Unfortunately, increasing longevity and quality of life do not always work in tandem.

What do you do if – or when – your once-financially-astute parents no longer have the ability to handle their affairs? How can you prepare for a time when they are unable or unwilling to recognize that their mental acuity has declined?

Parental Financial Planning

Taking care of one or both of your parents may seem a noble, selfless goal. But it can seem a much loftier ambition when you dive into the reality of the situation. You’ll find yourself making sure that your parents won’t outlive their money while also trying to manage your own finances, all while maintaining control of your personal stress level.

If you undertake this task, keep in mind that managing someone else’s money can be challenging and sometimes thankless work. And if handled less than diplomatically, you may wind up being viewed as overly aggressive rather than appropriately concerned. If you don’t have the time, patience, willingness, expertise and confidence to provide the level and quality of oversight your parents require, you may want to turn over at least some of the responsibility to a financial advisor or other trusted professional.

Maximizing Benefits

Whatever route you and your parents – perhaps together with other family members – choose, you'll want to ensure that your parents are receiving all the benefits to which they are entitled, including those from Social Security and any pensions, retirement accounts, insurance contracts and annuities they may have. These benefits should be accounted for in a comprehensive retirement strategy designed to help make sure their lifestyle expectations are in line with their income.

To solidify that strategy, you and/or a financial advisor also need to assess your parents’ income, expenses and net worth – and perhaps bring in other professionals such as doctors or home healthcare specialists to help explore health, emotional and other relevant factors. If your parents are not likely to have enough resources to pay for their own care, then finding ways to supplement their income will become a priority.

Key Financial Questions

Essential issues to address include whether your parents have – and will continue to have – the income they need to meet routine living expenses, whether they have difficulties remembering to pay bills, whether they encounter trouble keeping their financial paperwork organized, and if they (or you) have concerns about whether their assets are sufficient to pay for their needs as long as they live.

In addition, someone will have to decide whether, and for how long, they can remain in their home, or if they need a greater level of care – the kind provided by assisted-living communities, nursing homes, or another housing option.

Don’t forget to look at the sources your parents are tapping for current income. For example, are they using the proceeds from income-generating investments to pay bills or are they accessing their principal to meet their daily expenses? If they are spending down their principal too quickly, the next issue becomes whether they can redeploy their assets to generate more income while still tightly controlling risk.

A Watchful Eye

If your parents have multiple accounts and struggle to keep track of them all, you might suggest that they consolidate those accounts into one or two streamlined accounts and set up automatic payment plans. And while you’re attending to all these matters, keep an eye out for signs of financial fraud. Red flags can include abrupt changes to wills, a sudden change in attorneys or financial advisors, and a tendency to commit funds to complex or obscure securities or ventures.

Make sure your parents also have key documents in order – wills, trusts, long-term care, medical and other insurance policies. Ideally, they should secure all financial documents in a safe place and give copies to trusted relatives or friends. Also, recommend that they designate an estate executor and keep a secure list of usernames and passwords for any online accounts.

If your parents remain in good health, asking for power of attorney may never become necessary – but it can be invaluable if a time comes when you need to make choices without their input.

Take Care of You, Too

No matter how compassionate you are, try to avoid tapping into your own assets to help out your parents. Spending funds you've already earmarked for yourself could make a bad situation worse, and it could inadvertently shift the burden for your own future care to other family members – in other words, reinforcing an increasingly difficult-to-break cycle of dependency.

The experience of caring for your aging parents will likely be challenging. But it may also serve as inspiration for you to revisit your own plans for the future. If you don’t have your own up-to-date comprehensive retirement and estate plan in place, there’s no better time to start than now. The following generation will thank you for it.

COMPARISON OF PRIOR TAX LAW WITH THE TAX CUTS AND JOBS ACT

After making its way through Congress and seeing numerous last-minute tweaks, the tax reform bill was approved by Congress and then signed by President Trump on December 22, 2017. The new tax rates and countless other provisions generally took effect on January 1, 2018. The charts beginning on the following page, aimed at individuals and businesses, provide insight into changes made and provisions left intact. They provide brief explanations of past tax law and the Tax Cuts and Jobs Act of 2017, as well as insight from Raymond James thought leaders.

"Click Charts to see the  following illustrate the difference in the 2018 income tax brackets for the various filing statuses under the new tax laws versus what it would have been without these tax law changes: "

Laying the Groundwork for Tax Season

Smart moves at the beginning of tax season can help get your financial house in order.

March 2, 2018

Contrary to popular belief, tax planning isn’t limited to the months between year-end and April 15. In fact, smart tax planning goes beyond deductions and credits and should be incorporated throughout the year. As Americans prepare to file their returns, let’s take a look at what we should be thinking about for tax season and beyond.

Get It Together, Now

The beginning of each new year is the time to get organized before filing your taxes. Make an appointment with your accountant and prepare by gathering all the relevant documentation.

Among other things, you’ll need:

• Year-end statements from financial accounts
• W-2s, 1098s and 1099s, K-1s (many can be found online)
• Last year’s tax returns
• Receipts for donations and business-related expenses
• Social Security numbers for your spouse and dependents
• Business identification number
• Tax ID number for daycares or schools, if filing for the carechild credit

Keep in mind that most 1099s should be mailed before the end of January, but they could be delayed or revised. You and your accountant will have to decide if you need to file an extension, a common occurrence these days.

Strategies for Any Season

If lowering your taxes is a priority, start a conversation with your financial and tax advisors about ways to save money come April 15. Consider these perennial options:

• Put pretax dollars to work. Flexible savings accounts – available during your employer’s open enrollment period – allow you to use pretax dollars to pay for qualified expenses. You can also use pretax retirement contributions to reduce your taxable income.
• Fill in the blanks. Work with your financial advisor to make sure all the cost-basis information is complete and accurate before calculating losses and gains for tax-loss harvesting purposes.
• Pursue tax-efficient investing. Investing should be focused on meeting your goals, not just on reducing taxes. But in some cases the two dovetail nicely. For example, interest* from municipal bonds is generally exempt from federal and state income tax (if you’re a resident of the state the bond is issued in). You could also sell underperforming stocks to offset realized gains.

For all taxpayers, it’s important to take a look at what tax strategies could benefit your specific situation without losing sight of your overall financial goals. Reviewing your investments in light of your goals, the tax environment, and the economic landscape can help you see where adjustments need to be made to position yourself for the upcoming year and beyond.

*Interest may be subject to the federal alternative minimum tax and state or local taxes.

Municipal bond investments may involve market risk if sold prior to maturity, credit risk and interest rate risk. There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

Healthy Beginning to the Rebuilding Phase

Mike Gibbs, Managing Director of Equity Portfolio & Technical Strategy, discusses fourth quarter earnings and the early February pullback.

February 27, 2018

Over the past month, volatility returned to the equity markets. The S&P 500 experienced an 11.8% correction from its closing high on January 26 to its intraday low ten days later on February 9. This sharp pullback was the first one of its magnitude in roughly two years, making it feel much worse to investors that had grown accustomed to the exceptionally low volatility experienced throughout 2017. As a reminder, since 1980, the S&P 500 has experienced a pullback of -14.9% on average each year. Additionally, ~25% of days since 1980 have had an intraday move of at least 1% (in either direction). We believe that volatility is likely to return to more normal levels this year.

Following the correction, the S&P 500 has been able to rally back to its 50 Displaced Moving Average (up 7.6% from the low and back to positive territory on the year). We view this as a healthy beginning to the rebuilding phase. It is very common following sharp selloffs for the market to be choppy in the short term, as technical resistance and support levels are tested (and retested), and consolidation occurs to build a base for renewed upside.

The volatility was sparked by a couple of economic reports showing “hotter” than expected wage growth and inflationary pressures. The U.S. 10-year Treasury yield rose to a high of 2.94% (2.88% currently) from 2.43% at the end of 2017, and investors became concerned over the potential pace of wage growth, its impact on inflation and interest rates, and in turn its influence on future monetary policy. The concern is that rising inflationary pressures could cause the Federal Reserve to tighten too quickly, and potentially upset economic conditions. Inflation and interest rates remain low, but as they rear their head up over the course of the year, volatility could ensue. However, given the strong economic and earnings backdrop, pullbacks should be normal in nature and viewed opportunistically.

According to FactSet, 4Q17 earnings season was very strong (90% of S&P 500 companies have reported thus far) as earnings grew 14.9% on sales growth of 8.2%. This takes full year 2017 earnings growth up to 10.8% on sales growth of 6.3% – the strongest levels since 2011. Additionally, estimates have been revised sharply higher for 2018. Earnings for the first, second, third and fourth quarters and for 2018 as a whole now reflect estimated growth of 17.4%, 19.2%, 21.1%, 16.1%, and 18.2% respectively. Full year 2018 earnings growth has been upwardly revised by 7.9% since the start of the year, with the strongest upward revisions coming from Energy, Telecom, Financials, Industrials, and Consumer Discretionary. Furthermore, the strongest earnings growth is expected from Energy, Financials, Materials, Industrials and Technology.

Through the volatility, Technology outperformed, Financials and Consumer Discretionary held up very well, and the interest-rate sensitive sectors (Utilities, Telecom, Real Estate, and Consumer Staples) continued their poor relative strength trends. Energy also continued to be the worst-performing cyclical sector and broke to new relative strength lows despite crude oil prices back to $63/barrel currently.

Sources: FactSet, Raymond James Equity Portfolio & Technical Strategy

The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index. All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the trends mentioned will continue or that any of the forecasts mentioned will occur. Economic and market conditions are subject to change. Past performance may not be indicative of future results. Displaced Moving Average (DMA) is a moving average that has been adjusted forward or back in time to forecast trends. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities.

Strategies for Paying an Unexpected Tax Bill

If you're surprised by a tax bill, consider ways to pay without interrupting your financial plan.

March 2, 2018

Many working Americans expect a refund come tax day, but this year, some of us may get an unexpected bill instead. So what happens if you fall into that camp?

First, stay calm. Secondly, think strategically about how to pay what you owe, particularly if your money is invested, earmarked for retirement or stashed away in an emergency fund. Lastly, put plans in place to include more tax-mitigating strategies into your financial plan. Doing so can help avoid this situation next year.

If you do find yourself obliged to pay, perhaps you can rely on one of these options to help you settle up with the IRS and keep your financial plan undisturbed and on track.

Actions to Take

Make sure it’s not a mistake. Review your return with your accountant to make sure you’ve included every exemption and credit for which you qualify.

Consider taking out a low-interest rate loan. If you really do owe Uncle Sam a large chunk of change, a securities-based line of credit or a home equity loan may be a more cost-effective way to pay instead of selling securities that are part of your long-term investment plan. These types of loans can offer quick liquidity and flexibility to help you meet your tax obligation, at competitive interest rates. And you may be able to avoid capital gains taxes that could result from selling appreciated investments.

Carefully select investments that could be sold for additional liquidity. In some cases, selling securities to capture capital losses or rebalance a portfolio is a good idea. Talk to your advisor about securities that could be harvested for capital losses or ones that you can sell to help bring your portfolio back into alignment with your long-term goals. Another possible benefit? Unused realized capital losses may be available to offset future tax bills. Please remember that the process of rebalancing may result in tax consequences.

If Possible, Avoid …

An unfavorable offer in compromise. The IRS may negotiate an offer in compromise (OIC) to help you settle your bill for less than you owe. However, be aware that there are associated costs, including a filing fee.

Paying with a high-interest-rate credit card. This kind of debt can negatively impact your credit score and quickly rack up fees, making it harder to pay down the principal. Even though the IRS also charges interest (federal short-term rate plus 3%), it’s far lower than most credit card companies.

Taking money from your retirement accounts. It’s not a great idea to undermine a long-term plan by withdrawing funds early. You’ll be faced with penalties, as well as additional taxes on the amount you take out, which could mean you won’t have as much to pay your tax bill as you thought. And you’ll have even less for retirement.

Plan Ahead

If you do end up owing taxes, talk to your tax and financial advisors about other ways you can pay the bill without disrupting your investment plan or depleting savings. If you anticipate owing taxes again, you may also want to discuss investment and tax-saving strategies to reduce your liability next year and beyond.

A Securities Based Line of Credit (SBLC) may not be suitable for all clients. The proceeds from an SBLC cannot be used to purchase or carry margin securities. Raymond James Bank does not accept RJF stock as pledged securities towards an SBLC. Borrowing on securities based lending products and using securities as collateral may involve a high degree of risk including unintended tax consequences and the possible need to sell your holdings, which may lead to a significant impact on long-term investment goals. Market conditions can magnify any potential for loss. If the market turns against the client, he or she may be required to quickly deposit additional securities and/or cash in the account(s) or pay down the loan to avoid liquidation. The securities in the Pledged Account(s) may be sold to meet the Collateral Call, and the firm can sell the client’s securities without contacting them. A client is not entitled to choose which securities or other assets in his or her account are liquidated or sold to meet a Collateral Call. The firm can increase its maintenance requirements at any time and is not required to provide a client advance written notice. A client is not entitled to an extension of time on a Collateral Call. Increased interest rates could also affect LIBOR rates that apply to your SBLC, causing the cost of the credit line to increase significantly. The interest rates charged are determined by the market value of pledged assets and the net value of the client’s Capital Access account.

Securities Based Line of Credit provided by Raymond James Bank. Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. are affiliated with Raymond James Bank.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

February’s wild ride

March 2,2018

After a year or so of upward price momentum, exceptionally low volatility and record highs, the domestic stock market slipped in and out of correction territory at the beginning of the month and continued to zig and zag until the last minute of trading. At the same time, the 10-year Treasury yield rose to a high of 2.94%, and investors became concerned over the potential pace of wage growth, its impact on inflation and interest rates, and in turn its influence on future monetary policy. The concern was that rising inflationary pressures could cause the Federal Reserve to tighten too quickly, and potentially upset economic conditions. Some of this concern should be alleviated by the strong fourth quarter earnings we’ve seen. The Tax Cut and Jobs Act, a strong global economy, and a weaker U.S. dollar are additional tailwinds for equities, according to Raymond James Chief Investment Strategist Jeff Saut.

The pullback was the first real test of investors’ resolve in recent memory. Long-term investors have seen this happen time and again. In fact, the broad market S&P 500 Index has experienced a pullback of 15% on average each year since 1980, according to Senior Equity Portfolio Analyst Joey Madere. Volatility is likely to return to more normal levels this year, he added.

“One would expect either some kind of pause, or even better, some kind of pullback to rebuild the stock market’s internal energy,” Saut explained. “Plainly, the fundamentals remain excellent with earnings estimates continuing to ratchet up, revenues trending higher and a stronger economy… . And while interest rates have increased, they have done so in a very orderly fashion.”

The major indices, namely S&P 500, NASDAQ and the Dow Jones Industrial Average, slipped in the last few days of the month, although they remain in positive territory year to date.

                                                 12/29/17 Close     2/28/18 Close     Change YTD     % Gain/Loss YTD

DJIA                                                  24,719.22            25,029.20            +309.98                      +1.25%

NASDAQ                                           6,903.39               7,273.01             +369.62                     +5.35%

S&P 500                                             2,673.61                2,713.83              +40.22                      +1.50%

MSCI EAFE                                        2,050.79              2,070.37               +19.58                     +0.95%

Russell 2000                                       1,535.51                1,512.45                -23.06                     -1.50%

Bloomberg Barclays U.S.

Aggregate Bond Index                     2,046.37               1,999.70               -46.67                      -2.28%

Performance reflects price returns as of 4:30 EDT on Feb. 28, 2018. The EAFE reflects the previous day's close.

Here is a look at what’s happening in the economy and capital markets, as well as key factors we are watching:

Economy

• The Bureau of Labor Statistics January Employment Report showed nonfarm payrolls increased by 200,000, while the unemployment rate held steady at 4.1%.
• There was a smooth transition as Jerome Powell took the helm of the Federal Reserve from Janet Yellen. Fed decisions remain data dependent, a familiar refrain from the central bankers, explains Chief Economist Scott Brown.
• The labor market and inflation continue to be areas of focus as the Fed mulls monetary policy decisions.

Equities

• World stock markets began the month in turmoil, and the resultant correction gave investors their first real bout of downside volatility in over a year, explains Senior Research Associate Andrew Adams.
• The weakness was more of an overdue trading event, in Adams’ view, rather than concern about the health of the secular bull market, so his team remains constructive on U.S. stocks even with heightened volatility.
• Through the volatility, technology outperformed; financials and consumer discretionary held up very well; and the interest-rate sensitive sectors (e.g., utilities, telecom, real estate and consumer staples) showed weaker trends. Energy was the worst-performing cyclical sector despite crude oil prices sitting above $60 a barrel.
• Recent years have seen water scarcity issues in South Africa; California; Flint, Michigan; and Gujarat, India. There is a need to boost investment in water infrastructure – a theme that long-term investors may want to consider, suggests Energy Analyst Pavel Molchanov.

International

• International equity markets also were volatile in February but most markets were off their 2018 lows by the end of the month, assisted by a generally solid corporate earnings season, according to European Strategist Chris Bailey.
• In Europe, political discussions remain at the fore with important updates on the status of the proposed German grand coalition and the results of the Italian general election slated for early March.
• Meanwhile, the Brexit debate continues in the U.K.
• In Asia, there were lowered geopolitical risks due to Olympics-related diplomacy supplemented by generally positive economic data out of influential countries, such as China and Japan.

Fixed Income

• There are several factors simultaneously pushing and pulling on interest rates, potentially offsetting a significant directional move. The Tax Cuts and Jobs Act looks to free capital for corporations, lower price-to-earnings ratios and potentially increase revenues, all with the potential to promote future economic growth. Global central banks continue to purchase bonds in the open market, yet proclaim a soon-to-be reduction. At the same time the Fed is reducing its balance sheet and positioning to raise domestic rates at least a couple of more times this year. If these events continue to clash, interest rate movement may be dulled.
• The municipal curve value points have increased in the intermediate area. In the past month, Treasuries have outperformed high-quality municipal bonds, resulting in a widening of municipal to Treasury spreads in the 5- and 10-year points, notes Doug Drabik, Senior Vice President, Fixed Income Services Group.
• Global bond yields are following U.S. yields higher and this reinforces the need to understand the components of your portfolio and how they fit into your long-term financial plan.

Bottom Line

• Inflation and interest rates remain low from a historical standpoint, but are likely to move higher over the course of the year, potentially causing additional bouts of volatility.
• Given the strong economic and earnings backdrop, pullbacks should be normal in nature and viewed opportunistically.
• In the meantime, a well-diversified portfolio geared toward achieving your long-term goals should allow you to participate in upside potential as well as serve as a ballast for any short-term volatility that may arise in the coming months.

Your advisor will continue to watch for legislative updates as well as economic developments. In the meantime, please reach out to him or her if you have any questions.

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc., and are subject to change. Past performance is not an indication of future results and there is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets. Small and mid-cap securities generally involve greater risks. Companies engaged in business related to a specific sector are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. The performance noted does not include fees or charges, which would reduce an investor's returns. Asset allocation and diversification do not guarantee a profit nor protect against a loss. Debt securities are subject to credit risk. A downgrade in an issuer’s credit rating or other adverse news about an issuer can reduce the market value of that issuer’s securities. When interest rates rise, the market value of these bonds will decline, and vice versa. Price/Earnings Ratio is the price of a stock divided by its earnings. It gives investors an idea of how much they are paying for a company’s earning power. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. U.S. Treasury securities are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. Chris Bailey is with Raymond James Euro Equities, an affiliate of Raymond James & Associates, and Raymond James Financial Services. Not approved for rollover solicitations.

Blueprints for Your Financial Future

Investment policy statements can serve as a guide for you and your advisor.

February 23, 2018

Entrepreneurs don’t start a business without a plan and contractors don’t start a house without blueprints. Given the important role your wealth plays in your life, as an investor, you require your own strategy or blueprints to guide your way forward. An investment policy statement may fit the bill.

Typically a tool used by institutions managing significant assets, an investment policy statement (IPS) provides an opportunity to proactively define and document your investment goals and tolerance for risk with the completion of a risk assessment or questionnaire. They can help guide your relationship with your financial advisor, acting as a foundation and benchmark for you both as you work together to manage your wealth and pursue your financial objectives.

Finding Clarity

We often think of our financial goals as relatively straightforward. But in reality, once we consider market turbulence or our environment of increasingly complex investments, it’s rarely a simple matter.

Going through the exercise of a risk assessment – part and parcel with an IPS – prompts you to provide a detailed look at both your comfort with risk as well as your portfolio’s ability to weather that risk. For example, the idea of a 10% drop in the market may sound manageable to you, but if that means your $250,000 portfolio drops by $25,000, will you still be comfortable? In such an event, would you be tempted to make impulse decisions or would you trust in the long-term plan you’d previously laid out? These are the moments in which an up-to-date IPS can serve as a valuable guidepost for you and your financial advisor.

Further, the discussions you’ll have when you develop your IPS can help you to clarify not just your financial objectives but also reveal the personal motivations behind them, including the aspirations you have for your family, career or enduring legacy. Defining those, in turn, makes it easier for your financial advisor to ensure your portfolio continues to support your long-term vision for the future.

Your Financial Touchstone

Wealth is a highly personal matter, touching each facet of our lives. It’s only natural that temporary volatility that may seem to threaten your financial well-being and the wealth you’ve worked hard to amass could spark some emotion or stress. In periods of market turmoil, seeing the immediate decline in your assets will undoubtedly be more distressing in the moment than when imagining the mere possibility of such an event while in the comfort of your financial advisor’s office.

If and when the market takes a downturn, an IPS can serve as a grounding tool – which is exactly how they’re used by institutions tasked with the management of significant assets. An IPS helps to keep them from straying from their mandate, while pursuing their objectives, and it’s this disciplined, steadfast approach that allows institutions to outperform individual investors time and again. In a 2015 report from Dalbar, the average institutional investor outperformed the average diversified individual investor over the previous 20 years, by a factor of three (7.31% vs. 2.11%). The pattern repeats itself over shorter time periods, too. Adhering to a long-term investment plan may account for some of the differences among average investors, although there are disciplined individuals who remain focused on their long-term financial plan and achieve better results over time.

Going through the measured and thoughtful practice of creating an IPS can help you stay confident and focused on your long-term goals, and avoid making emotional decisions in the moment.

Common Ground for You and Your Advisor

Your relationship with your advisor will be a long one – one that has seen you through many milestones, but also one that will see your children do the same. And as your life evolves, an IPS will serve as a benchmark for both you and your advisor, ensuring neither of you loses sight of the future you’ve long been working for. You could be a testament to the power of steadfast, long-term planning guided by an IPS, your advisor and yourself.

In addition to your risk tolerance and financial objectives, an IPS will give you an opportunity to define the roles and responsibilities you and your financial advisor each hold within your partnership, as well as the roles of other professionals such as accountants and portfolio managers. If you and your financial advisor do part ways, say after a move or retirement, having this document will make a potential transition that much easier since your goals and expectations have been laid out.  

A Living Document

Think of your IPS as something that will evolve as your life does, likely needing adjustment as you reach milestones or life events including an expanding business, a growing family, the purchase of property or retirement. Consider even using your IPS, or a summary of it, as a guide and reference point for your quarterly review. Year-end may also be a good time to schedule your annual review of the document itself to ensure it continues to reflect your needs and wishes, and support your long-term financial health.

The Architecture of an IPS

Make sure to cover these key elements when drafting your IPS.

Investment Objectives and Constraints

What is it that you’re hoping to accomplish by investing? What is your risk tolerance? This section also will detail your time horizon, contribution and withdrawal needs, tax considerations, as well as target return goals.

You’ll also share your personal motivations behind your financial objectives. Do you have strong preferences for sustainable companies or companies whose values mirror your own?

Outline what you want your wealth to do – fund an active retirement; help you pursue a philanthropic legacy; or further education for your loved ones – and who you want to benefit as your money grows. Be sure to update this section as your goals change or evolve.

Portfolio Allocation

Based on your risk tolerance and return objectives as well as any constraints you’ve established, your advisor will help you determine the appropriate mix of assets that align with your overall investment philosophy. Here, you’ll lay out your portfolio preferences including how and where you’d like your assets allocated among various investments with different risk/reward profiles. These details should change as your tolerance for risk does, particularly when nearing or entering retirement.

Roles and Responsibilities

How hands-on would you like to be? Clarify what you and your family are responsible for, and what your financial advisor is responsible for. By taking the time to define your roles and having it in writing, you can both better manage expectations, as well as your relationship, moving forward. Be sure to update this section as your priorities change.

Rules for Rebalancing

Together with your advisor, determine how often you’d like to review your portfolio and rebalance or reset it in an effort to stay close to your ideal asset allocation model. This will include whether you’d like your dividends reinvested or disbursed to you as cash. Some leave this for their annual review, while others prefer to rebalance or reset more frequently to stick closer to their ideal allocation, which can drift over time. As you make updates to your asset allocation goals, make sure to review and update your rebalancing preferences, as well.

And Now, the Don'ts

We’ve covered the do’s. When it comes to your IPS, make sure you don’t:

• Underestimate time horizons. For investments, these can extend much longer than most might think, even past your retirement or passing.
• Generalize your goals. Get specific. Are you hoping to buy a cabin in Colorado with room for grandkids, or spend a certain amount each year on travel?
• Use jargon or vague language. Avoid wording that is either too restrictive or too broad and could get misinterpreted down the road.
• Abandon an IPS that needs fixing. It’s normal if your first stab at an investment policy isn’t quite right. Don’t scrap it altogether but instead work with your advisor to determine where adjustments make sense.
• Set it and forget it. Your IPS should be a flexible, living document. When your life changes significantly, talk to your advisor to see if updates to your IPS might be needed, too.

Given its role in your life, your wealth is far too important to gloss over. Going through the practice of creating and updating an IPS will ensure you’ve considered each element of your investment strategy – all while helping your financial advisor to maintain a thorough understanding of your priorities and goals.

Investing involves risk, and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results. The performance noted does not include fees or charges, which would reduce an investor's returns. Diversification and asset allocation do not ensure a profit or protect against a loss. The process of rebalancing your portfolio may result in tax consequences.

Sources: The Globe and Mail; Investopedia; USA Today; Wilshire Advisor Solutions; Dalbar

A Vital Role

It’s time to take charge of your relationship with your healthcare provider.

February 22, 2018

When faced with a health issue, we turn to our doctor and other healthcare specialists for information, support and a positive resolution. But when you head to an appointment, do you go armed with research gleaned from reputable sources? Are you prepared to ask questions and voice your concerns if something doesn’t seem right? Many aren’t. In a recent Medscape poll, a majority of physicians and nurses surveyed said they would describe less than a quarter of their patients as empowered advocates for their health.

It’s time to take charge of your relationship with your healthcare provider in a way that places you squarely on the same team, rather than on the sidelines.

Take Control, Stat

Your doctor is an expert, but why not take some time to do your own research about a medical issue you’re experiencing before heading to an appointment? Your access to reputable websites, like those maintained by the Centers for Disease Control and Prevention or the Mayo Clinic, can provide you with invaluable information and help you know what to ask your doctor, as well as better understand what he or she recommends. Just be sure to avoid misinformation; rely instead on websites run by reputable, major hospitals, healthcare organizations and government agencies. Afterward, research any recommended procedures and prescriptions, as well as costs through your state’s department of insurance and your insurance company’s website.

Loud and Clear

When you visit the doctor, go prepared with a list of specific questions informed by your online research. Do your best to avoid what are commonly called “doorknob complaints,” things you suddenly remember – or simply gain the courage to express – as you walk out the door. Voice those concerns early on in the appointment, while your doctor has time to discuss the possibilities and your options.

Once you’ve received a clear explanation of your condition and proposed treatment, results and any possible side effects, write the information down for future reference while you’re still in the office. If there’s something you don’t understand, ask for further clarification. In a situation that’s emotionally stressful, it’s best not to rely on memory alone. Even routine doctor’s visits can be overwhelming, so think about taking someone you trust with you. At the very least, they’ll provide support during and after your appointment. They could also be another set of eyes and ears to record the details you may learn, which, in turn, will make coordinating care among providers easier.

Remember that you’re the boss. You have the right to respectful and considerate treatment, just as you have the right to ask questions and receive meaningful responses. You have the right to a healthcare professional who will listen to you and take time to understand what’s going on. And you also have the right to ask for a second medical opinion and, if necessary, to change physicians to ensure you’re receiving the care you need.

Keep Your Records Straight

If you’ve ever switched doctors or seen a specialist, you know that transferring your records can be a hassle. But, with electronic health records becoming the norm, it’s easier than ever to both obtain and then digitally maintain your own copies. By creating a personal healthcare file that tracks your medical history, you can advocate for yourself without worry of forgetting anything – an important consideration if you’re nervous and distracted during an appointment, or are not able to tell your medical provider yourself. Documents to include (and update regularly) in your personal healthcare file include:

• Notes from previous appointments
• Medications with dosages
• Medical providers and their contact information
• Important treatment records (e.g., hospital summaries, surgeries, lab reports)
• Allergies
• Emergency contacts
• Your preferred pharmacy
• Family medical history
• Implanted devices you have
• Immunization records
• Alternative treatments you’ve undergone and supplements you take
• Healthcare proxy or durable power of attorney, indicating who makes medical decisions for you if you’re not capable of doing so

Once you’ve created your personal healthcare file, share its location with your loved ones – particularly those who have been granted HIPAA authorization – and any individuals who will be called on to support you during a health issue. This summary of your medical history can be indispensable in the event of an emergency, as it ensures hospital staff and other parties involved can be brought up to speed quickly.

Learning how to advocate for your own health is vital when forming a partnership with your healthcare providers to better participate in your own care, rather than simply receive care passively. You are the only one who knows what it’s like to live in your body, so now is the time to begin to feel empowered, to voice your opinion, to ask questions, and to truly take control of your health.

Sources: medscape.com; webmd.com; urmc.rochester.edu; health.usnews.com; futureofhealthcarenews.com

Deficits, the Fed, and Rates

Brian S. Wesbury – Chief Economist

Robert Stein, CFA – Dep. Chief Economist

Strider Elass – Economist

   Forgive us our incredulity.  The bond vigilantes were certain that as the Federal Reserve hiked short-term rates, longterm interest rates would barely budge, the yield curve would invert, and the economy would fall into recession.

   That theory has been blown to smithereens, so now we hear that it’s rising long-term rates that will cause a recession.

    According to the vigilantes, which ascribe deep meaning to every move in long-term interest rates, the U.S. has gone from secular stagnation and permanent low rates, to huge (impossible to fund) deficits and rising rates – overnight.

    No wonder the average investor is completely confused.

    So, let’s start at the beginning.

   Yes, the Fed drove short-term interest rates to zero and held them there for seven years.  And, yes, the Fed bought $3.5 trillion in bonds during Quantitative Easing.  And, yes, the Fed is reversing course.  It’s lifted the federal funds rate five times since 2015, and it’s slowly allowing its bond portfolio to shrink.

   The federal government enacted tax cuts and spending increases, and the budget deficit ($665 billion in 2017) is now expected to approach $1 trillion or more in 2018 and beyond.

   So, how much impact does each of these things have on interest rates?

    Here’s our list:

    1) If the budget deficit were no higher in 2018, than it was in 2017, long-term bond yields would still be higher today.

   2) If the Fed had just lifted short-term interest rates, but had not started unwinding QE, longer-term bond yields would still be higher today.

   3) When the Fed promises to hold short-term interest rates down, they pull longer-term rates down as well.  Long-term rates (say a 5-year bond) are just a series of short-term rates (five 1-year bonds).  So, rising 1year yields mean rising 5-year yields.

    When tax cuts and regulatory reform lead to stronger economic growth, a pick up in the velocity of money, and rising inflationary pressures, the bond market begins to realize that short-term interest rates need to rise – across the yield curve.  Rising interest rates have everything to do with better economic data and nothing to do with QE and deficits.

   Every dollar the government spends has to be paid for with either tax revenue or borrowing from bondholders.  Either way, the money is “crowded-out.”  If you pay higher taxes, but need to buy a machine, you have to borrow; if the government borrows the money first and doesn’t tax you, you still need to buy the machine.  Either way, debt is created.  But, it’s not the debt itself that drives interest rates up or down.

   So, what about the QE-unwind? At this point, the Fed is only reducing its holdings of Treasury debt by $12 billion per month, versus a total pool of publicly-held Treasury debt of $14.8 trillion.  A drop in the bucket.

   Interest rates are determined by fundamental factors, not who owns what, or how many, bonds.  Right now, fundamental factors in the US – faster growth, rising inflation and a tightening Fed – are pushing yields up….not deficits.  In other words, the Vigilantes may think they have us on the run, but they’re not close to being dangerous.  

"To read more please follow the link"

https://www.ftportfolios.com/Commentary/EconomicResearch/2018/2/26/deficits,-the-fed,-and-rates

QE and Its Apologists

Brian S. Wesbury – Chief Economist

Robert Stein,CFA – Dep. Chief Economist

Strider Elass – Economist

On March 9, 2018, the bull market in U.S. stocks will celebrate its ninth anniversary.  And, what we find most amazing is how few people truly understand it.  To this day, in spite of massive increases in corporate earnings, many still think the market is one big “sugar high” – a bubble built on a sea of Quantitative Easing and government spending.

While passing mention is given to earnings (because they are impossible to ignore), conventional wisdom has clung to the mistaken story that QE, TARP, and government spending saved the economy from the abyss back in 2008-09.

A review of the facts shows the narrative that “Wall Street” – meaning capitalism and free markets – failed and government came to the rescue is simply not true.

   Wall Street was not the driving force behind subprime mortgages.  In his fabulous book, Hidden in Plain Sight, Peter Wallison showed that by 2008 Fannie Mae, Freddie Mac and other government programs had sponsored 76% of all subprime debt – not “Wall Street.”  Everyone was playing with rattlesnakes and government was telling them it was OK to do so.  But, when the snakes started biting, government blamed the private sector, capitalism and free markets. 

  At the same time, Wall Street did not cause the market and economy to collapse; it was overly strict mark-to-market accounting.  Yes, leverage in the financial system was high, but mark-to-market accounting forced banks to write down many performing assets to illiquid market prices that had zero relationship to true value.  Mark-to-market destroyed capital.

   QE started in September 2008, TARP in October 2008, but the market didn’t bottom until March 9, 2009, five months later.  On that day in March, former U.S. Representative Barney Frank, of all people, promised to hold a hearing with the accounting board and SEC to force a change to the ill-advised accounting rule.  The rule was changed and the stock market reversed course, with a return to economic growth not far behind.

  Yes, the Fed did QE and, yes, the stock market went up while bond yields fell, but correlation is not causation.  Stock markets fell after QE started, and rose after QE ended.  Bond yields often rose during QE, fell when the Fed wasn’t buying, and have increased since the Fed tapered and ended QE.

   A preponderance of QE ended up as “excess reserves” in the banking system, which means it never turned into real money growth.  That’s why inflation never took off.  Long-term
bond yields fell, but this wasn’t because the Fed was buying.  Bond yields fell because the Fed promised to hold short-term rates down for a very long time.  And as long-term rates are just a series of short-term rates, long term rates were pushed lower as well.

   We know this is a very short explanation of what happened, but we bring it up because there are many who are now trying to use the stock market “correction” to revisit the wrongly-held narrative that the economy is one big QE-driven bubble.  Or, they use the correction to cover their past support of QE and TARP.  If the unwinding of QE actually hurts, then they can argue that QE helped in the first place.

   So, they argue that rising bond yields are due to the Fed now selling bonds.  But the Fed began its QE-unwind strategy months ago, and sticking to its plans hasn’t changed a thing.

   The key inflection point for bond yields wasn’t when the Fed announced the unwinding of QE; it was Election Day 2016, when the 10-year yield ended the day at 1.9% while assuming the status quo, which meant more years of Plow Horse growth ahead.  Since then, we’ve seen a series of policy changes, including tax cuts and deregulation, which have raised expectations for economic growth and inflation.  As a result, yields have moved up.

  Corporate earnings are rising rapidly, too, and the S&P 500 is now trading at roughly 17.5 times 2018 expected earnings.  This is not a bubble, not even close.  Earnings are up because technology is booming in a more politically-friendly environment for capitalism.  And while it is hard to see productivity rising in the overall macro data, it is clear that profits and margins are up because productivity is rising rapidly in the private sector.

   The sad thing about the story that QE saved the economy is that it undermines faith in free markets.  Those who argue that unwinding QE is hurting the economy are, in unwitting fashion, supporting the view that capitalism is fragile, prone to bubbles and mistakes, and in need of government’s guiding hand.  This argument is now being made by both those who believe in big government and those who supposedly believe in free markets.  No wonder investors are confused and fearful.

  The good news is that QE did not lift the economy.  Markets, technology and innovation did.  And this realization is the key to understanding why unwinding QE is not a threat to the bull market.  

"Please follow the link below for more information"

https://www.ftportfolios.com/Commentary/EconomicResearch/2018/2/20/qe-and-its-apologists

Consensus forecasts come from Bloomberg.  This report was prepared by First Trust Advisors L. P., and reflects the current opinion of the authors.  It is based upon sources and data believed to be accurate and reliable.  Opinions and forward looking statements expressed are subject to change without notice.  This information does not constitute a solicitation or an offer to buy or sell any security.

This is Just a Correction…

Brian S. Wesbury – Chief Economist

 Robert Stein, CFA – Dep. Chief Economist

Strider Elass – Economist

Last year US stock markets experienced the least volatile year on record, hitting new highs seemingly every day.  Then came the tax reform bill to end 2017, and a huge January with the S&P 500 rising 5.6%.  Investors, especially individuals who finally became convinced that the rally would go on, piled in.  It wasn’t massive 1999style euphoria, but many investors finally succumbed to the fear of missing out. 

And as if on cue, sentiment (but not fundamentals) shifted, and stock markets gave up their 2018 gains.  The S&P 500 - as of the close on February 8th - was down 10.2% from its all-time closing high set on January 26th.  

Everyone wants to find a “reason” for a correction, to explain what happened, especially when it takes them by surprise.  And these days the prime culprit, according to the financial press, is interest rates heading higher.  Some attribute this increase to rising wage pressures and inflation, some blame ballooning budget deficits.  But beneath it all is a widely-held belief that stock market gains have been propped up by easy money and low interest rates – a sugar high. 

   
Our answer to this: No!  The stock market has been driven higher by earnings growth.  In fact, given the recent downdraft in stock prices and the simultaneous increase in earnings estimates, the S&P 500 is now trading at roughly 16.7 times 2018 earnings estimates.  That’s not high by historical standards. In fact, that is lower than the 30 year average of 19.4. 

More importantly, we have been expecting interest rates to go higher and have urged the Fed to raise rates more quickly.  Given the pace of economic growth, the Fed is a long way from being tight.  At the same time, economic data has been strengthening and earnings are booming.  With 337 S&P 500 companies having reported Q4 earnings as of the 8th of February, 76.9% have beaten estimates, and earnings are up 17.0% from a year ago. This double-digit earnings growth is forecast to continue through 2018, even with higher interest rates. Corporate balance sheets are stronger than they have been in decades, spending is accelerating and the recent tax cut is an unambiguous positive. 

Corrections scare the snot out of people.  For many, who thought markets only go up, they feel like the end of the world.  This is especially true when pundits start trying to explain the drop in stock prices by arguing that there are fundamental problems with the economy.  This time is no different.  But, in our opinion, this is an emotional correction, not a fundamental one.  The US is not entering a recession, and higher interest rates over the next few years do not spell doom for the economy or markets.  

In fact, because of better policy, economic growth this year looks set to accelerate to 3%+ (we are forecasting 4% real GDP growth in Q1). That is why interest rates are rising, because of better than expected economic growth.  This is a good thing!  Not a reason to sell stocks.  In this case higher interest rates are a byproduct of a stronger economy, not the unwinding of QE or higher deficits. 

Retail sales rose 0.4% in December, are up 9.0% annualized over the past six months and are up 5.5% year over year.  January’s ISM Manufacturing and Nonmanufacturing indexes just hit the highest readings for a January in seven and 14 years respectively.  In January, hourly earnings were up 2.9% from a year ago, the best reading since 2009. At the same time, initial claims have been below 300,000 for 153 consecutive weeks.  Private payrolls were up 196,000 in January, and the unemployment rate is down to 4.1% and headed lower.  And no, this is not a “part-time” recovery.  In the past twelve months, full-time employment has grown by 2.39 million jobs while part-time employment is down 92,000!  With 5.8 million unfilled jobs and quit rates at the highest levels of the recovery, there should be little question why the Fed continues to hike rates. 

We use a Capitalized Profits Model (the government’s measure of profits from the GDP reports divided by interest rates) to measure fair value for stocks. Our traditional measure, using a current 10-year Treasury yield of 2.85% suggests the S&P 500 is still massively undervalued. The model needs a 10-year yield of 3.9% today to conclude that the S&P 500 is already at fair value with current profits.  Fair value, not over-valued.  

What we focus on are the Four Pillars of Prosperity: Monetary Policy, Tax Policy, Trade Policy, and Spending & Regulation. So, let’s see where those stand: 

1. Monetary Policy – The Fed is still easy and will be for the foreseeable future. Remember, there are still over $2 trillion in excess reserves! 

2. Tax Policy – Tax policy has improved dramatically on the margin, a tailwind for growth and earnings. 

3. Trade Policy - The protectionist talk coming from Washington is worrisome, but, so far, there has been much more hot air than substance. In fact, total trade (exports + imports) sits at record highs.  

4. Spending & Regulation – This is a mixed, but still positive, bag.  On the regulation front, 2017 saw the biggest decline in regulation, at least since the Reagan-era, and possibly in history.  That’s great news for growth.  The spending side is still a concern.  The recent budget deal reached in the U.S. Senate boosts spending at least as fast as GDP growth over the next couple of years.  That’s not a recipe for long-term economic acceleration, but also not an immediate threat to growth. 

The bottom line shows that the fundamentals of the economy are strengthening.  Higher interest rates are a byproduct of a stronger economy. And, out of the four potential threats to the economy, only one is moderately negative. 

It's not often you get a substantial pullback in the market when both economic and earnings growth are strengthening.  Stay calm. Stay invested in equities.  Don't fight the fundamentals.  

This information was developed by first trust, an independent third party. The opinions of Brian S. Wesbury, Robert Stein and Stider Elass are independent from and not necessarily those of RJFS or Raymond James.