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Insights

The SECURE Act

January 22, 2020

To amend the Internal Revenue Code of 1986 to encourage retirement savings, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE, ETC.

  1. Short Title.—This Act may be cited as the “Setting Every Community Up for Retirement Enhancement Act of 2019.

The SECURE Act was signed into law on December 20, 2019 as part of the Further Consolidated Appropriations Act, 2020, H.R. 1865.


So much for the legislative history. Here are 10 provisions that might affect individuals.

  1. The End of The Stretch IRA. Non-spouse beneficiaries (like your children, family members and friends) of certain inherited IRAs and qualified plans must withdraw all money from inherited accounts within 10 years of the original owner’s death. Spousal rollovers, as well as a disable or chronically ill designated beneficiary continue are exceptions to the new 10 year rule.

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One Way To Help Improve Your Long-Term Investment Performance

"The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of broad framing while also saving time and agony, by reducing the frequency with which they check how well their investments are doing.

Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough, and may be more than enough for individual investors. In addition to improving the emotional quality of life, the deliberate avoidance for exposure to short-term outcomes improves the quality of both decisions and outcomes.

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What Does the Bear Market Chart Tell You?

Since WWII, we have experienced 14 Bear markets (and I am not counting the Panic of 2018 when the market fell 19.8% and recovered in under 4 months). The average drawdown for these Bear markets was 31% and the bear market lasted 14.2 months, on average, from peak to trough. The recovery times varied.  Months to recovery is on the right.

Bear markets are ordinary, temporary, common as dirt and painful to experience. You can expect to see another – the question is when. The next recession (the likely cause of the next bear market) will have been the most anxiously, long-awaited recession in my lifetime. The financial media talks about it incessantly. Rest assured, no one will be happy once it arrives. We want to know when the bear will enter the room…but no one does.

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How To Lose 15% Of Your Retirement Fund

May 21, 2019

The Panic

During December 2018, when the market was declining -scratch that - panicking, and stock prices were getting less expensive, investors sold $28.9 Billion of US equity mutual funds and ETFs and they sold $29 Billion of Non-US mutual funds and ETFs. $57 Billion formerly invested in equities went somewhere. Bond funds experienced $49 Billion of outflows as well. Was it mattress time? Since there are always two sides to a trade, some investors made out well to the detriment of others.

In December, the S&P 500 index declined 10%. The net selling stopped on Christmas Eve and at that point the index was down 15.7%.

The Recovery

January through March, US funds had outflows of $16.6 Billion and World funds had inflows of $4.6 Billion. Net equity outflows were $12 Billion.

But during April and so far in May, $27 Billion of equity fund outflows have occurred. US outflows were $19.8 Billion and Non-US was $7.7 Billion.

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Thinking About Making A Back-Door Roth IRA Contribution?

People who are otherwise precluded from making direct Roth IRA contributions may consider the two-step back-door Roth IRA. As usual, the devil is in the details.

The “cream in the coffee” rule applies to back-door Roth IRA’s.

That means, if you hold assets in a traditional IRA and you make a nondeductible contribution to your traditional IRA, and then make a distribution from your traditional IRA to your Roth IRA, only a percentage of the distribution from the IRA to the Roth IRA will be tax-free.

If you have more than one IRA, all IRA distributions are treated as one distribution.

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Are There Problems Hiding In Your 401(k)?

I’m not referring to whether you’re investing in 5 star or 1 star funds.

  • Is your 401(k) on autopilot?
  • Did you make your fund selections by looking at recent performance numbers and piling into the fund with the best performance last year?
  • Did the number of fund choices get too complicated?
  • Did you allocate a percentage to each fund offered?

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What's The Market Going To Do?

That’s a question I am frequently asked when I meet someone and they learn I am a financial planner. (Believe me, if I knew what the market was going to do, I’d be doing everything in my power to take advantage of that uncommon knowledge.)

It sure makes for lively TV debates and compelling reading though, doesn’t it? Every TV guest and financial journalist (with or without a finance background) has an opinion. Some express their opinion forcefully as if that will transform their opinion into fact.

Sadly, no one knows. The economy won’t tell you either. And yet forecasters spend time trying to link the economy and the market to portray the economy a predictor of the markets.

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A Little History: Ten Years After … from Barrons’s – July 7, 2008

“IT'S OFFICIAL: THE BEAR HAS ARRIVED. The Dow Jones Industrial Average last week qualified for the widely accepted definition of a bear market of a 20% drop from the highs. The good news is that once the decline reaches that arbitrary 20% mark, based on history, the market has suffered most of its losses. The bad news is that the decline typically drags on for some time, and time may be the worst enemy. Investors may initially try to grab erstwhile highfliers that have crashed and burned but rarely regain their former status. And as the decline wears down investors' psyches, they tend to bail out at the market's nadir, when things look bleakest -- and when the greatest opportunities present themselves.

The post-1940 average bear market (as defined by the Standard & Poor's 500 index) produced a decline of 30.4% from a peak that took 386 days to reach its trough, according to data compiled by Bespoke Investment Group. By the time the market was down the requisite 20%, the average bear market was 74% completed. Based On those averages, the bear market would have another 118 days to run and would face losses of another 14% from current levels.

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Starting To Worry About The Market?

The higher the stock market moves, the more money it attracts from investors who don’t want to miss out. And the more nervous investors feel about the possibility (or should I say probability) of market declines. The worry of a market decline is acute if you are older and have accumulated significant assets. The pain of a decline will be sharper because the temporary disappearance of more real dollars. Percentages don’t hurt as much.

How about a few facts?

Since 1948 (we call this the modern era), intra-year declines have averaged 13.4% and the return of the S&P 500 index has been positive in 51 of those 70 years.1

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Playing a Long-term Game With a Short-term Strategy?

This brochure provides a long-term perspective on investing...and may challenge you to alter your current investment strategy.

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