Broker Check

Market Commentary

2016 Election and Your Portfolio

 

We have had 24 hours to digest the election results and wrap our minds around a Trump presidency and a Republican Congress.  Regardless of which color you represented, blue or red, I believe we can all agree we are glad it is over.  I know many of you have been concerned about how the markets would react to the election results and the impact to your portfolio.

While the results of our 2016 election was our “Brexit vote” moment, our markets held up extremely well yesterday.  Perhaps we learned something from the British.  Investors did not overreact to the surprising news of Trump’s victory.  Instead, people thoughtfully assessed the sectors and industries that could possibly benefit going forward.  People also realized that our economy is strong, earnings are on the rise and employment is solid.  This does not mean there will not be volatility going forward.  Changes in trade agreements could upset emerging market investments.  Immigration reform could increase wages and push inflation higher if we lose part of our work force.  Tax reform could increase discretionary spending, corporate growth and profits benefiting shareholders.  Increased infrastructure spending could put more pressure on bonds.  The bottom line is that we don’t know exactly how things will change and the effect they will have on your investments.  What we do know is that all of this takes time to develop.  We do know that we continue to diligently oversee your investments.  We do know that a diversified[i] portfolio of investments helps weather the unknown.  We have always taken risk into consideration in regards to your portfolio.  Finally, we do know that we will always put you first and do our very best for you and your family.

Listed below are a couple links from strategist we use regarding their viewpoints.

J.P.Morgan

http://image.gim.jpmorgan.com/lib/fe92137277640d7f72/m/2/MI-MB_Election_Response_4Q16.pdf?email_campaign=1929&email_job=37929&email_contact=003j0000018WSgSAAW&utm_source=clients&utm_medium=email&utm_campaign=mi_digitalevent_postelection_recap&memid=7220927&email_id=8379&e=ZZ&t=335&f=&utm_content=text_readmore

Clark Capital

https://www.ccmg.com/trump-wins-trump-wins-uh-oh-now/

Please don’t hesitate to call us with any questions or concerns.  We are here to help you.

 

[1] Diversification does not protect against loss of principal.

 

 

Tax Strategies to consider before year end

 

1.Harvest losses to offset capital gains

If you have realized capital gains from selling securities and do not have any previous losses to carry forward, you may want to consider selling some positions at a loss to offset some or all of those gains. If you intend to purchase the same position back, you will need to wait at least 31 days before buying it again to avoid a wash sale.

2.Establish a Qualified Retirement Plan

Self-employed individuals should consider opening a retirement plan. Maximum contribution amounts are larger compared with a regular IRA. As such, depending on the plan type could offer other tax benefits.

3.Make deferred compensation elections

If you already have a plan established, evaluate “maxing out” your contribution limit.

4.Donate to charity

Consider donating appreciated securities. Your deduction will be the fair-market value of the securities on the date of the gift, not your original purchase price. “Contributions to charitable organizations may be deducted up to 50% of adjusted gross income.” “Contributions to certain private foundations, veteran’s organizations are limited to 30% of adjusted gross income.”[1] Another option is to set up a Donor Advised Fund.

5.Gift

You can gift up to $14,000 ($28,000 married couples) per donee with no federal gift tax or reporting requirements. There are no tax ramifications for the recipient.

6.Flex Spending Account

Check your balance to see if there are any funds remaining. Typically Flex Spending Accounts are “use it or lose it” for the calendar year. Some employers may offer a grace period for the first two and a half months of the following year.

7.Take your Required Minimum Distribution (RMD)

If you are 70.5 or older, you must take your RMD from a traditional IRA and/or IRA based plan. Failure to do so results in an IRS penalty of 50%. If you do not need the money, you can donate up to $100,000 directly to a charity from your account.

8.College 529 Plans

Instead of gifting $14,000 to an individual directly, you can contribute to a 529 plan for future college expenses.


[1] https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions

Please consult with your Financial Advisor and/or tax accountant to determine what situation(s) is best for you.

The material is for informational purposes only. It should not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Before investing in any 529 plan, you should consider whether your or the designated beneficiary's home state offers a 529 plan that provides its taxpayers with state tax and other benefits that are only available through the home state's 529 plan. You also should consult your financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state's 529 plan(s), or any other 529 plan, to learn more about those plans' features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision. 

Investment objectives, risks, charges, expenses, and other important information are included in a 529 plan's offering statement; read and consider it carefully before investing. There is no guarantee that the 529 plan will grow to cover college expenses. You may also go to www.collegesavings.org for more information.