Weekly Market Commentary

Stocks rose Friday, led by banks and anticipation of trade talks between President Trump and Chinese President XI Jinping at the G-20 summit in Japan. The three major indexes posted gains for the month, quarter and first half of the year. The Dow enjoyed its best June since 1938; the S&P saw its biggest percentage increase in June since 1955. For the week, the Dow fell 0.45 percent to close at 26,599.96. The S&P lost 0.27 percent to finish at 2,941.76, and the NASDAQ dropped 0.32 percent to end the week at 8,006.24.

Returns Through 6/28/19	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	-0.45	15.40	12.45	17.97	12.26
NASDAQ Composite (PR)	-0.32	20.66	6.70	19.51	12.73
S&P 500 (TR)	-0.27	18.54	10.51	15.37	10.71
Barclays US Agg Bond (TR)	0.43	6.11	7.91	2.31	2.97
MSCI EAFE (TR)	0.65	14.03	2.11	10.56	2.31

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. The NASDAQ is based on price return, which is the capital appreciation of the portfolio, excluding income generated by the assets in the portfolio in the form of interest and dividends. (TR) indicates total return. (PR) indicates price return. MSCI EAFE returns stated in U.S. dollars.

Maybe Next Time — The Fed’s fourth meeting of 2019 ended with no change in short-term interest rates. The Fed last cut interest rates on Dec. 12, 2008, or 10½ years ago (source: Federal Reserve, BTN Research).

Not Saving Enough — The average 65-year old American male has accumulated retirement savings that will sustain him in retirement for 9.7 years. The problem is, the average 65-year old American male has a life expectancy of 83 years, or 8.3 years beyond when his savings runs out. This study assumed male retirees would need retirement income of 70 percent of the individual’s preretirement pay (source: World Economic Forum, BTN Research).

Taking the Keys — Banks repossessed 10,634 homes nationwide in May 2019. Banks repossessed 93,777 homes in May 2010, the second worst month ever in American history (source: ATTOM Data Solutions, BTN Research).

WEEKLY FOCUS – Estate Planning Misconceptions

Many people postpone creating an estate plan because considering their demise is unsettling. Others make false assumptions that cause them to neglect this important task or make less-than-ideal decisions. Here are a few common misconceptions related to estate planning: 

Estate planning is for the wealthy. Anyone who owns property or assets, or has loved ones who depend on them for income or care, needs an estate plan. And as the next paragraph notes, some estate documents protect an individual’s own best interests before death. 

A will is all I need. You should also consider a letter of instruction that explains your plan to your executor; a power of attorney to empower a representative to make legal and financial decisions if you can’t; and a healthcare proxy, which designates an agent to make healthcare decisions, and details the kind of care you do or don’t want to receive in the event of incapacity. 

I don’t need to worry about estate tax. Yes, the current federal tax exemption for an individual’s estate is $11.4 million. However, many states still tax estates or inheritance. One way to reduce this liability is by gifting down your estate before you die. The federal government doesn’t tax gifts up to $15,000. Only two states do – Connecticut and Minnesota.  

A will can distribute all my assets. Accounts that have beneficiaries – like 401(k)s, IRAs, life insurance and pay-on-death accounts – transfer assets directly to named beneficiaries. That’s why it’s essential to update beneficiaries as soon as your family circumstances or wishes change. 

A will helps me avoid probate. A will doesn’t help you avoid probate. A revocable living trust is often used for this purpose. Adding a joint owner to a bank or investment account – if the account is owned as joint tenants with rights of survivorship – will avoid probate. 

Both spouses’ assets become community property. Certain assets can remain individual property during marriage, including: assets acquired before marriage and inheritance and gifts received during marriage – if they are kept in the individual spouse’s name and not changed into community property through a written transmutation instrument.

Estate planning can be complex. With so much at stake, it’s crucial to get it right. We would be happy to work with you, your attorney and tax professional to secure, and make the most of, your legacy.

 

This commentary brought to you by J. Graydon Coghlan, CRPC
and the team at CFG Wealth Management, Inc.
4370 La Jolla Village Drive, Suite 630 San Diego, CA 92122
Phone: (858) ­550-3960 Fax: (858) ­550-3969 Toll Free: (800) ­884-5121

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright January 2018. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI# 2623599.1

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