Dear Clients & Friends,
We hope you’re well and staying safe. Over these past few months, all of our lives have been turned upside down. We have all adopted the idea that remote communication will forever have a place in our business and personal relationships. At Janney, in many respects, we have enhanced our capabilities and found more efficiency in our operations. At home, we’ve each tried to step back and build new routines and set goals for ourselves (even small goals like doing a workout at home or making it a priority to go for a walk 3x/week) so that we feel a sense of normalcy in our day to day lives.
With most of us spending extra time at home, a deep clean of our homes and our financial lives is a great way to feel productive and in control. Here are 5 simple ways to take control of your financial life, (and a few tools and online resources Janney has created to help make managing your finances easier).
- Clean out your purse and wallet - Take some time to clean out your purse and wallet. You can throw out receipts and lose paper that is not needed. You can get rid of any reward cards you no longer use or the gift cards that no longer have balances. I would even go so far as to literally clean out your wallet/purse (think: disinfectant spray or leather cleaner) to welcome a fresh new energy into your money relationship. Organize your dollars or credit cards in a way that helps you feel gratitude for the money you do have.
- Organize your financial documents - Whether you have an old school file cabinet with your financial documents or scan everything to your Janney Document Vault online, take some time to make sure your financial documents are in good order. You can have folders for categories such as insurance, tax returns, medical documents, financial accounts, estate planning documents, etc. And review the documents to shred anything you no longer need.
- Consider the potential impact of consolidating your financial accounts - Oftentimes, clients come to us with a number of different financial accounts, and it may be difficult for them to know where they stand in relation to their financial goals. Take some time and review your portfolio; you may find there are some changes to make. Or maybe you have a few checking and savings accounts and only really need one of each now. We find that consolidating your accounts can help you streamline everything and stay on top of each account to ensure your money is being managed accordingly per your financial plan and goals. Taking the opportunity to consider consolidating accounts is also a good time to review your overall investment allocations across your accounts to make sure you are invested in line with your financial goals and risk tolerance. My Net Worth allows you to link outside accounts to give you a holistic snapshot of your financial life.
- Get rid of any expenses you don’t need - Sit down and review your monthly expenses, all of them, and see if there are random subscriptions you no longer use that you can cancel. You can even take it a step further after cancelling the expense by calling to see if you are entitled to any reimbursement of fees incurred. You’d be surprised what you may get back in refunds for subscriptions or services that you cancel. You can set up an auto savings into your savings account or retirement account for any freed up money you create by following this step. We have attached an estimated annual expenses worksheet to help you memorialize your spending. If you would like us to run an Itemized Cash Flow Projection for you or your family, let us know and we are happy to incorporate these numbers into your plan.
- Refresh your financial plan –With all that is going on in the world and in our lives, it is important to revisit your objectives, needs and preferences to make sure you are on track to achieve those goals.
CLIENT EDUCATION: RMD Rollover Relief for 2020
When the CARES Act was signed into law on March 27th, it permitted some taxpayers to skip their Required Minimum Distributions (RMDs) for 2020. However, many investors who wanted to get ahead of their annual RMD requirements either had already taken their RMD early or scheduled it to be taken evenly throughout the year, resulting in a portion distributed before the signing of the CARES Act. If you were one of these individuals, and you’d like to roll back an RMD taken in 2020 in order to reduce your tax liability for the year, you now have that option.
Reminder
What is a Required Minimum Distribution (RMD)?
Required minimum distributions, often referred to as RMDs or minimum required distributions are amounts that the federal government requires you to withdraw annually from traditional IRAs and employer-sponsored retirement plans after you reach age 72 (or, in some cases, after you retire). You can always withdraw more than the minimum amount from your IRA or plan in any year, but if you withdraw less than the required minimum, you will be subject to a federal penalty.
If any of the situations above describe your RMD, you may replace it as a rollover by August 31, 2020:
1. A single 2020 RMD taken at any time in 2020
2. A first-time 2019 RMD deferred to 2020, taken between January 1 and April 1, 2020
Note: 2019 RMDs taken in calendar year 2019 cannot be rolled back
3. If you have taken multiple RMDs (i.e. monthly) in 2020
Note: The aggregate total of those distributions (up to the RMD amount) may be rolled back
4. If you have taken a 2020 RMD from an Inherited IRA
Note: A rollover certification form will not be required to replace RMDs from inherited IRAs.
What’s New with our team
Dan and Nellie celebrated Dan’s mother’s and Nellie’s grandmother’s 95th birthday. What would have normally been a small family gathering, turned into a huge car parade to celebrate “Mary T” Honan.
With over 100 family members and friends, Mary T was greeted with a procession of 45 cars, 4 fire trucks and two police cars parading by her home in Falmouth, ME. She was so excited and so was the newspaper --- coverage of the parade made the front page of the Portland Press Herald.
On Father’s Day, Dan and Nellie played in not 1 but two Father’s Day Golf Tournaments at both Portland and Falmouth Country Club. They came in second place in the scramble tournament at Falmouth Country Club that Sunday!
Kelsey finished up remote teaching for her now 1st grader, Olivia, at the beginning of June. Since then, in her free time she has been spending her days outside swimming and taking hikes with the family.
MARKET COMMENTARY
What had started as a promising year for growth both here and abroad, turned upside down as the coronavirus outbreak suffocated economic activity in its wake.
The supportive environment for risk assets quickly gave way, causing enormous distortions across both the equity and fixed income markets. The forceful response by policymakers and the reopening of economies has led to a vigorous rebound in the values of stocks and bonds alike. We believe the balance of this year and well into next should build on recent improvements. However, a flexible investment posture may be required given the evolving risks associated with the virus’ uncertain path, American-Chinese relations, and a fast-approaching U.S. presidential election. Click here to read Janney’s Mid-Year Market Outlook.
Market Highlights:
Fixed Income
• Market plumbing problems manifested in violent fashion, leading to plunging interest rates and volatile credit and municipal markets in the first half of 2020.
• With the exception of treasury securities, bonds were not immune to the distortion caused by the panic selling that occurred late in the first quarter.
• We expect the Fed to pin short-term interest rates at zero for an extended period, but allow longer-term interest rates to drift higher in the second half of the year.
• Municipal bonds are relatively inexpensive, and while record-low yields may limit new inflows, reinvestment demand should continue to be supportive through the summer.
Equity
• The National Bureau of Economic Research (NBER) declared that the record U.S. expansion ended in February.
• The fiscal and monetary response in support of resuscitating economic activity has been massive. This could help bridge the economy to a self-sustaining recovery.
• The amount of stimulus provided on a global basis is remarkable, which may lead to a worldwide recovery, albeit one that is starting from an extraordinarily deep contraction.
• Corporate profits are expected to grow into next year but the pace will be differentiated by sectors leaving some to expect a V-shaped recovery and others more L-shaped.
• The rally in stock prices since the end of March has been driven by expectations that a resumption in normalized activity is in the offing.
• A therapeutic response is ultimately the necessary ingredient to pass this liquidity-driven phase underwritten by governmentally sponsored stimulus to fundamental growth.
• We are quite constructive on U.S. stocks and believe leaning into more of a cyclical bias is warranted. This includes Financials, Industrials, Energy, and Materials.
• Valuations in overseas markets, and economic-leverage of most foreign bourses, emboldens our view that international equities could prosper over the coming year.
