Wrapping up the first quarter, it’s clear that stocks had an impressive run. The S&P 500 index benefited from a resilient U.S. economy, decreasing inflation, rising corporate profits, and the anticipation of potential rate cuts from the Federal Reserve (Fed). March marked the fifth consecutive winning month, resulting in the best first quarter performance since 2019. Also, this month we were warned “Don’t Look Up”, during a great North American Eclipse.
Historical trends support staying invested (see chart – Impact of being out of the market). According to information obtained from LPL financial, since 1950, the S&P 500 has risen in 93% of the 12-month periods following a five-month winning streak, with an average gain exceeding 12%. Additionally, down years are rare following strong first quarters. While a stock market correction may be overdue, attempting to time the market and avoid a modest decline of 5-10% is challenging, especially given the healthy market fundamentals.
Despite potential risks such as inflation, interest rates, and geopolitical tensions, current market fundamentals and historical patterns suggest that staying the course is prudent. However, a slight adjustment in allocation may be appropriate for those overdue for rebalancing or with longer investment horizons.
Pre-Retiree/Retiree
Roth Conversions
For many the idea of paying more taxes in retirement is overwhelming. And even worst is leaving a tax burden to those you care about. This is a challenge that is only going to get worst if you believe taxes are going to rise in the years to come. However, there’s a potential option to reduce the impact of taxes in the long run. Given the right circumstances and timing a Roth Conversion could be a good option for some.
Read More
The Importance of Estate Planning
Only 34 percent of Americans have created an estate plan according to an AARP article titled “8 Common Estate Planning Mistakes”. For most estate planning is not something on the top of their mind, but its significance cannot be overlooked. Whether you’re young or old, wealthy or modest in assets, having a plan in place for your estate is crucial. Let’s explore why estate planning matters and how it can shape your financial future.
Business Owner
Selecting a Business Retirement Plan
Hiring right is important but retaining the great ones is paramount. For most business owners retention of key employees will make the difference between success or failure. As a business owner your financial security is also a very important part of why you started and stay in business. Selecting a business retirement plan can play an important role in helping you address these challenges.
A business retirement plan provides an opportunity to retain your best. For some employees, your retirement plan is an important benefit and the reason why they stay. As a benefit employees consider your match and the investment options. Your matching percent is important and dependent on your industry expectations. Some industries it is expected and others it’s a value add. Your goal is to shift the equation in your favor by providing a value to your employees that will benefit your business. Options are to increase your match percentage or increase the vesting period. Increasing your vesting period may be the difference between an employee staying or leaving early.
Next, saving for a stable retirement is also an important consideration for business owners. As a business owner, you have three options for building a stable future for yourself. These options are your personal earnings, your savings, and finally your business value. Your Savings and business value are two important wealth building options. For most owners you are not optimizing your personal savings. This could be not contributing the maximum to a retirement plan or leaving savings on the table by not finding the best retirement plan for you situation.
A retirement plan is an important tool for owners to use to retain there best and meet their personal financial goals. Next month, I’ll cover IRA based retirement plan options.
The Finish
The eclipse brought a special warning that we all should consider “Don’t look up”. Being an avid golfer I’d heard this countless times from my dad. “Keep your head down….” Like many, I couldn’t avoid the temptation and would not heed the warning. Now as we see the markets rise and fall, I find myself echoing this warning “Don’t Look Up…”. Often during times like these we lose track of this simple reminder to not look up and we take your eye off of the ball – goals.
Staying the course is essential. Just as in golf and eclipse viewing, keeping your head down and staying focused in investing, sticking to your plan despite market fluctuations is key to long-term success. So, during the ups and downs, let’s remember to stay grounded, stay focused, and keep our eyes firmly on our goals.
-Lamont
Principal Wealth Advisor
