Onword to 2017

Happy New Year! For many of us it has been a great year, specifically the final quarter of '16. If you stayed patient and followed your long-term goals, you should have reaped solid investment rewards over the last three months. If your returns were not up to your expectations, let's review your plan so that both you as the client and me as the advisor can do the work that ensures you a solid future.

S&P 500 3-Month Return

The last three months give a good example of why investors should stick to their long-term plans. The market has had a great run and continues to advance despite Brexit, the US presidential election, and interest rate increases.

​The S&P 500 has earned 11.96 over the past year (ending Jan 9 2017). Compare this to the first two weeks of 2016 — literally the worst first two weeks of a year ever!

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2016 Highlights

Health care and its associated costs has been and will continue to be a significant topic. ​This study by Kaiser showed that even though premiums had a slow increase, deductibles are higher than ever. Many of those on the Federal Marketplace likely saw an increase for 2017. While it is too early to know how the Federal government will alter the Affordable Health Care law, it is fair to assume that there will be some change to it. My takeaway from this is to ensure you have proper emergency savings to cover unanticipated medical bills. If you are eligible for an HSA, let's discuss how much you can save in a tax-advantaged accuont. 

Brexit made every headline in June, and for good reason. While this will have an investment impact, I'm expecting the "noise" was greater than the economic market. Interestingly, the market has not responded negatively, and businesses are continuing with their plans. Those with UK-specific investments should monitor them carefully; however, since most of you reading this are not heavily invested in UK equities, I see no reason to be concerned. 

My biggest headline this year was the Federal Reserve raising the interest rate. This will affect most of us in two ways: credit (loans) will be more expensive, but cash investments will do better. The Feds would have only done this if they anticipated a solid economy to withstand the increase.

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My Crystal Ball for 2017 
​(I wish it were this simple!)

As you may know, I follow Vanguard's advice for both economic expectations and investment predictions. Their recent report calls for a guarded, but not bearish, 2017, waiting for a "combination of higher short-term rates and more favorable valuation metrics." They go on to say that the next five years will be tougher than the previous, requiring discipline, lower expectations, and low-cost strategies. All of these confirm my investment philosophy — we are in this for the long run, not the next three months (except when I want to proove a point regarding the S&P500 as shown above!)

For your individual needs, remember your personal economic situation. Will you have a life event that will impact your finances? Will changes in local or state laws, taxes, or regulations affect your business? Are there any tax changes or contribution limits that you will be affected by? These will often have a greater impact on you than the overall market and are issues worth planning for. Begin to think of these issues in preparation of your annual review with me.

For additional information on my 2017 thoughts, see my recommended reading at the bottom of this post.

Have Questions? Send me an email

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Key Date: IRA Deadline & Taxes

The IRA & Roth IRA contribution deadline for 2016 is April 17, 2017. Yes, the IRA does us a favor and allows contributions in 2017. If you have not maxed out your contributions for 2016, let's talk about this and how we can get you to fully take advantage for 2016 and plan for 2017! 

I prepare taxes through my other business, Sherman Financial Consulting. If you are in need of a tax preparer, please contact me!

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Further Reading

1. Slightly political leaning, but a look at how the GOP can impact Social Security and Medicaire. Take this with a grain of salt as it is still early to know what the new federal leglistlature will introduce and pass. 
2. Thinking about interest rates? I am too...here's a look at how an increase in the federal rate will impact us.
3. China and the Euro zone are getting news for good reason. 
4. Something you might not have heard and has not received much news - the dollar has dropped compared to the yen. Let's hope it picks back up, but I'm paying attention. 
5. Am I concerned with the Dow topping 20,000? Yes, but not as much as interest rates. And I'm not the only one.
6. Finally, for uplifting news: Charles Feeney gave away most of his wealth in complete secrecy.  He flew coach and carried plastic bags, showing a truly frugal lifestyle.