We’d like to start off by congratulating those of you who are still following through on your New Year’s resolutions! If you are not, you are certainly not alone. It’s easy to get caught up in old routines and fail to make the changes you wished for. Building new habits can be hard, yet sticking to those resolutions can be incredibly rewarding.
In his great book “Atomic Habits”, James Clear points out the power of making small but consistent improvements. If you were to improve at something by 1% every day for the whole year, at the of the year you would be a whopping 37 times better than when you began. That’s more than a 3600% increase just by making small, consistent improvements.
We’re here to help you stay on track with your goals, and build those small but powerful habits that will get you where you want to go. Now is a great time to review your those goals, and let us show you how some small changes could make a big difference.
More: Financial New Year’s Resolutions for 2020
by Mohammad Vedadi, CFP®, CRPC®
2020 Market Outlook
At the start of last year, coming right on the heels of a near 20% drop at the end of 2018, we encouraged you to stay disciplined. Investors who stayed disciplined and did not abandon the markets were rewarded for their good behavior.
As we begin 2020, many economists are predicting a good-but-not-great 2020 for equity markets. While there are some cautionary signs we still do not think we are on the edge of a recession, and importantly US consumers are in strong financial position. Consumer activity drives over two-thirds of our economy, so a strong consumer base provides fuel for the economy to keep chugging along.
If you would like to see more data behind why many outlooks remain cautiously optimistic, this outlook from Clearbridge provides some good details. Among the points they highlight are:
- Investor confidence is still not high despite a good 2019. If that sentiment improves it drive markets even higher.
- There are record amounts of cash sitting on the sidelines. Some of this money could flow to the market and provide a boost.
- Central banks around the world are supporting growth.
- The year leading up to a presidential election has historically been positive 90% of the time.
While there are a number of reasons to be optimistic, our advice stays the same: stay disciplined and work with your advisor. There are still plenty of risks in the world, both known and unknown. Our approach to investing is designed to get you the outcomes you are seeking through good times and bad.
In December the SECURE Act, or Setting Every Community Up for Retirement Enhancement Act, was signed into law. This bill brings about some of the biggest changes in short-term retirement policy history and is aimed at strengthening retirement security for all Americans.
There are several provisions in the bill, but we’d like to highlight just a few of the key takeaways that may impact you:
Delayed Required Minimum Distributions (RMDs) – RMDs are the amount of money that the IRS requires investors to withdrawal from their qualified retirement plans upon reaching the age of 70½. In an effort to allow retirement funds to grow a little bit longer and eliminate the tax burden on distributions for another year and a half, the SECURE Act pushes back the age for which people need to take RMDs from 70½ to 72.
Elimination of the stretch IRA provision – The stretch IRA provision of the past allowed non-spousal beneficiaries to gradually spread out their account distributions over the course of their lifetime. However, the SECURE Act now requires all non-spousal beneficiaries of IRAs to take a full payout from the inherited IRA within 10 years of the death of the original account holder which can have a big impact on beneficiaries given the tax burden the distributions can cause. This rule change only applies to heirs of account holders who pass away in 2020 or later.
529 plan flexibility – The SECURE Act allows investors to make up to $10,000 a year in student loan repayments using money in a tax-advantaged 529 account. This allows parents who have money remaining in a college fund to help a child that has already graduated.
Please talk to your advisor for additional information and guidance on how the SECURE Act may impact your specific situation.
Join us in welcoming Julie Herron to the team
Julie joined Signature Wealth Management in late 2019 as a Client Services Assistant. She supports the Duluth office. Prior to joining Signature Wealth Management, Julie spent 8 years in the educational software industry. She has also worked in the insurance industry, focusing on worker’s compensation and commercial property insurance.
Julie has been married to John for 29 years and they are the proud parents of two sons.