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Time to Check your Beneficiaries

Did you know there are assets that will not transfer to your heirs based on the instructions in your will? Instead, these assets transfer based on a beneficiary form you filled out.  While many advisors recommend you check your beneficiary designation forms any time you experience a major life event – birth, death, marriage, or divorce – we believe it’s a best practice to review your beneficiaries once per year.

Retirement savings accounts, such as IRAs, SIMPLE IRAs, SEP IRAs, 401k, 403b, and pension plans, annuity contracts, and life insurance proceeds are all assets that transfer based on the beneficiary designation and not through your will. Despite the importance of beneficiary designations, many people do not consult an advisor, attorney, or CPA before completing these forms.

There are a host of potential problems that can occur if your beneficiaries are not properly designated. Here are just a few examples:

Retirement savings or life insurance proceeds passing to an ex-spouse. Surprisingly, this is a common occurrence because many people forget to update old beneficiary forms.  One major potential downfall of this mistake is disinheriting children from a second marriage, at least in regards to these accounts. Read more

1st Quarter 2014 Market Commentary

Financial markets greeted the New Year with increased volatility. Global stock markets retreated in January, rebounded strongly in February, and declined again in March.  By quarter end, US Stocks were up 1.81% (S&P 500 Index), developed international stocks were up a modest 0.66% (MSCI EAFE Index), and emerging market stocks, showing continued weakness, were down -0.43% (MSCI Emerging Markets Index).  Fixed income investors caught a breather from negative price pressure, as bonds returned 1.84% (Barclays Aggregate Bond Index) for the quarter.  Alternative investments demonstrated their value in a diversified portfolio. Global real estate was up 7.03% (S&P Global REIT Index), and commodities snapped a lengthy losing streak, returning 6.99% (DJ-UBS Commodity Index) year to date.

During the quarter, the current bull market for US stocks turned 5 years old. For those who love useless data facts, it is now the 5th longest bull market for US stocks since the Civil War. [1] The S&P 500 Index has returned 179% since its March 9, 2009 intra-day low of 666, and is 7% shy of tripling in value.[2]  However, current levels are only 21% above the previous high in October 2007. Television pundits and Wall Street sell-side analysts are ever so eager to call the top of the market and predict the next down turn. While we do not attempt to make such predictions, we have a difficult time finding legitimate reasons for a major stock market decline in the near-term. Bear markets are caused by the existence of one or more of these four factors – economic recessions, restrictive monetary policy, excessive valuations, and exogenous shocks. Read more

Is Investing a House of Cards?

By:  H. Clark Gaines, Jr.    (On Twitter @Clarkgaines)

 

“Pay attention to the fine print.  It’s more important than the sale price.” – Francis Underwood

Frank Underwood

 

 

 

 

 

 

 

 

 

Francis Underwood, the smooth talking Congressman played by Kevin Spacey in Netflix’s hit show, House of Cards, is never short on crafty one-liners.  Seldom though does he give us one with so many parallels to investing.  In today’s investing climate, there’s a lot of hype about Exchange Traded Funds (ETFs).  The assumption is that mutual funds are slow, expensive, antiquated means of investing while ETFs are liquid, transparent, and a cheap way to access a market sector or index.  Some broker-dealers offer teaser rates for trading ETFs with no transaction costs.  Imagine that, a “free” way to invest in the market!

Most of our clients have heard us say, there is no free lunch in investing.

Just because something appears free, nearly free, or even “cheap” doesn’t mean that is the case. Transaction costs are only one piece of a complex investing puzzle. Read more

4th Quarter 2013 Market Commentary

The US stock market pleasantly surprised everyone in 2013.  The S&P 500 Index experienced a record year. International stocks also had strong year, although emerging market stocks were down and trailed global stock markets significantly. Interest rates rose in 2013, causing negative returns for the bond market. Emerging market bonds, following a strong 2012, fell further than domestic bonds. Alternative investments were a mixed bag.  Global real estate was up slightly, while commodities were down due to weakness in gold, agriculture, and industrial metals. Of course calendar years are arbitrary measures for long-term investors who do not buy in on January 1st and sell on December 31st, but they do serve as convenient time periods for reflection and review of market performance.

Human nature dictates that we gravitate towards that gleaming return of the S&P 500 Index last year. We are tempted to measure our success against this number. How quickly we forget the reason we choose diversification in the first place! Remember the discussion about not “putting all of your eggs in one basket”? Let’s assume you were invested in a portfolio comprised only of the S&P 500 Index, and compare it to two hypothetical portfolios; a properly diversified 60/40 (moderate risk) portfolio and an aggressive portfolio of global stocks. We will compare an investment of $100,000 on January 1, 1995; one portfolio contains only the S&P 500 Index, one is globally diversified portfolio with 60% in global stocks and 40% in bonds, and the third is a globally diversified portfolio with 100% in stocks.[1] Read more