Second Quarter – 2018
Quarterly Newsletter to Retirement Plan Participants
With all of the bluster and hand-wringing we’ve witnessed over the past six months, it’s pretty bizarre that portfolio returns are basically unchanged since last year. It’s actually quite remarkable that the headwinds – Fed rate hikes, tariffs, wage inflation, politics and now a stronger dollar – haven’t been more negative for stocks.
What’s also interesting is the divergence we’ve seen in the past six months – non-US stocks, emerging markets and bonds have taken a hit — down roughly 3%, 7% and 2%, respectively, while tech stocks and small caps have been on a roll — gaining close to 10% each.
For the past several years we have advocated a more aggressive approach for retirement savers, favoring stocks over bonds. We are still in that camp, although after ten years of zero interest rates, it is encouraging that short guaranteed bonds offer returns of 2 – 3%.
Our view is that the economy has momentum, and the expansion will continue, even though the pace of growth may slow. We don’t expect a prolonged, nasty trade war with China or the EU, but also recognize it could happen, and we’ll continue to watch for events that could provide dislocation and therefore opportunity. After last year’s impressive rally, it would not be at all surprising to see this year end with little to offer by way of stock market gains.
EMBREE FINANCIAL works diligently with the 401(k) Investment Committee to provide you a best‐in‐class Retirement Savings Plan. Together, we regularly monitor investment performance, mutual fund quality and plan costs.
Put Those Tax Savings to Work!
Recent shifts in federal tax brackets should mean more money in your pocket today. While everyone’s situation is different, the average tax payer is seeing an increase by roughly 3% in their after-tax take-home pay. In the wake of the Tax Cuts and Jobs Acts, it may make sense to contribute this extra amount to your plan, and maximize your savings in your retirement accounts, including IRAs. A little extra savings today can mean significant differences in your retirement nest egg!
Consolidate Old 401(k)’s
Savers today have many more cost-effective options to grow investments in an IRA or taxable account. For as little as $5,000 you can get started with a high-quality firm like Charles Schwab. The problem for most is the hassle of chasing down old plan money. We have assisted dozens of 401(k) participants in rolling old 401(k)’s into an IRA. Why not consolidate and simplify? We’re happy to help. Give us a call at 312-527-5565
Market Returns YTD 2018
Please contact us at 312‐527‐5565 if you have any questions regarding your Plan, expenses, industry trends or your own retirement strategy.