Articles tagged with: Cornerstone Financial Group Iowa

Is a Home an Investment?

From one perspective, the answer is yes; from another, no.

When you buy a home, are you investing? If you buy it to flip it or buy it as a rental property, the answer is yes. If you buy a home simply to live in it, the answer may be no.

Your home is an expression of your lifestyle, a wonderful setting for your life, and a place you can enjoy in privacy and comfort. As an investment, though, it is essentially illiquid, and its rate of return is no sure thing.

Home values do not automatically increase with time. Buyers learned that lesson in the Great Recession. Simply using the S&P/Case-Shiller home price index as a barometer, house prices today are roughly where they were in 2007 – it has taken the residential real estate market that long to recover from the mortgage meltdown.1

Through the decades, real estate values have risen, and they will probably keep rising for the near term – but perhaps, not as quickly as some buyers hope. Why, exactly?

Home prices are inexorably linked to wages. Over the past year, hourly earnings have grown 2.5%. This has mystified many economists and frustrated others. Normally, when the jobless rate is below 5%, you have much greater wage growth. Six months before the start of the Great Recession (March 2007), the unemployment rate was 4.4% (right where it is now), and wages were growing at 4.2% a year.2,3

Ideally, wage growth keeps pace with rising real estate values. That is not happening now. Across the past year, the 20-city S&P/Case-Shiller home price index has shown home values appreciating at a rate of between 5.5-6% annually. If real estate values continue to climb 6% per year and wages rise just 2.5%, you will soon see buyers priced out of the market – unless, of course, home prices drop because sellers can no longer get the prices they want. That is something prospective sellers (and buyers) ought to keep in mind, plus some other truths.4

The fact is, stocks have appreciated more than real estate in the long run. Through the decades, home values have increased about 4% annually and stocks have increased about 10% annually (albeit with some remarkable year-to-year volatility).1

Stocks do not need upkeep. You will never need to tear out, reroof, or repaint a portfolio. Houses need all kind of repairs with time, and repair costs can eat into your gains. You must also pay property taxes. If you envision your home as an income-producing asset, that means playing landlord on some level. Many homeowners are not ready to take that step.

Remember that home values tend to rise gradually. If you see your home as an investment, see it as a long-term one. Staying put ten years or more before selling or trading up could help you realize the kind of financial outcome you want.

Mike Moffitt may be reached at ph#641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com    

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – businessinsider.com/buying-your-home-as-an-investment-is-a-1990s-mentality-2017-8 [8/9/17]

2 – epi.org/nominal-wage-tracker/ [9/5/17]

3 – bls.gov/opub/ted/2007/apr/wk2/art01.htm [4/9/07]

4 – ycharts.com/indicators/case_shiller_home_price_index_composite_20 [9/5/17]

The Equifax Data Breach

Have you been affected?  If so, how can you try to protect yourself?

On September 7, credit reporting agency Equifax dropped a consumer bombshell. It revealed that cybercriminals had gained access to the personal information of as many as 143 million Americans between May and July – about 44% of the U.S. population. The culprits were able to retrieve roughly 209,000 credit card numbers, in addition to many Social Security and driver’s license numbers.1

How can you find out if you were affected? Visit equifaxsecurity2017.com, the website Equifax just created for consumers. There, you can enter your last name and the last six digits of your Social Security number to find out. (Having to enter the last six digits of your SSN hints at how significant this breach is.)2

If you are among the consumers whose data was hacked, Equifax will ask you to return to equifaxsecurity2017.com to enroll in an identity theft protection product, TrustedID Premier. This program will provide you with free credit monitoring for a year. (The lingering question is whether your data could be used easily by criminals afterward.)1,2

How should you respond? Beyond simply taking Equifax up on its offer of one year of identity theft insurance and free credit monitoring, you can take other steps.

Check your credit reports now. (Unless you have already done so in the past month). You can get one free credit report per year from Equifax, TransUnion, and Experian. To request yours, go to annualcreditreport.com. Scrutinize your credit card and bank account statements for unfamiliar activity, and sign up for email or text alerts offered by your bank or credit card issuer(s), so that notice of anything suspicious can quickly reach you.

Consider changing the password for your main email account. A weak password on that account is a low bar for a cybercrook to hurdle – and once hurdled, that crook could potentially pose as you to change the passwords on your financial accounts.3

Regarding bank, investment, and credit card account passwords, avoid the obvious. Too many people use simple passwords based on their pet’s name, their last name and year of birth, the high school they attended, etc. Sadly, these same simple facts are often answers to security questions for credit card and bank accounts. Ask your bank or credit card issuer if you can use additional, random words or a PIN for passwords or security question answers. That way, you can avoid logging in using data that is in the public record. You want your password to be long and random, to make it harder for a would-be thief to guess.

You may want to consider paying for additional identity theft protection for years to come. This is one way to try and shield yourself from the unauthorized use of your Social Security number, driver’s license number, email accounts, and credit card numbers.

If someone calls you out of the blue claiming to be from Equifax, do not cooperate with them. Unless Equifax is returning your call, they will not contact you by phone. The same applies if you get a random, unsolicited email or text from “Equifax” – do not comply, or you may inadvertently hand over personal information to a fraudster. Stay vigilant, today and in the future.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – wired.com/story/how-to-protect-yourself-from-that-massive-equifax-breach/ [9/7/17]

2 – washingtonpost.com/news/the-switch/wp/2017/09/08/after-data-breach-equifax-asks-consumers-for-social-security-numbers-to-see-if-theyve-been-affected [9/8/17]

3 – cleveland.com/business/index.ssf/2017/09/devastating_data_breach_at_equ.html [9/8/17]

 

 

When Should You Buy a Car?

Could timing be a factor in getting a better deal?

If you are on the verge of shopping for a new or late-model used vehicle, some recent research from TrueCar may interest you – and even lead you to some savings. TrueCar, which monitors both U.S. auto dealer sales and dealer incentives and discounts, says that Monday and Thursday are the ideal days of the week to buy. Fewer buyers head to dealerships on those two days than any other, and the average sales discount off MSRP is slightly higher (8.1% compared to 7.5% on Sundays).

Fall and winter may be the right season to arrange a car or truck purchase. October is when dealerships tend to offer their biggest discounts on full-size pickups. November sees the deepest discounts on compact and mid-sized cars. Markdowns on luxury and mid-sized SUVs tend to be largest in December. Also, New Year’s Eve and New Year’s Day are often the very best days of the year to buy. TrueCar found an average discount of 8.5% off MSRP on January 1.2

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.  

Citations.

2 – cars.usnews.com/cars-trucks/6-best-times-to-buy-a-car [3/31/17]

Celebration of the Common Worker

In honor of Labor Day 2017

It has been known by many different names–Worker’s Day, Labor Day, the last big weekend of the summer-and sadly, once Labor Day passes, we put the summer clothes away, drain the swimming pools and fountains, and start to batten down the hatches for winter.

“Labor Day differs in every essential way from the other holidays of the year in any country,” notes Samuel Gompers, founder and longtime president of the American Federation of Labor. “All other holidays are (to some degree) connected with conflicts and battles of man’s prowess over man, of strife and discord for greed and power, of glories achieved by one nation over another.  Labor Day…is devoted to no man, living or dead, to no sect, race, or nation.”

The holiday is a creation of the labor movement and is dedicated to the social and economic achievements of American workers. It constitutes a yearly national tribute to the contributions workers have made to the strength, prosperity and well-being of the country.

The first Labor Day was celebrated on Tuesday, September 5, 1882, in New York City, in accordance with the plans of the Central Labor Union. In 1884, the first Monday in September was selected to be the annual holiday, and the idea spread with the growth of labor organizations.  In 1885, Labor Day was celebrated in many industrial centers of the country.

Originally, Labor day was to be celebrated with a street parade to exhibit to the public “the strength and spirit de corps of the trade and labor organizations” of the community, followed by a festival for the recreation and amusement of the workers and their families. In recent years, the celebration has undergone a change, especially in large industrial centers where mass displays and huge parades have proved a problem.  The change is more a shift in emphasis and medium of expression.  Addresses by leading union officials, industrialists, educators, clerics, and government officials are given wide coverage in the media.

The vital force of American labor has added materially to the highest standard of living and the greatest production the world has ever known and has brought us closer to the realization of our traditional ideals of economic and political democracy. It is appropriate, therefore, that the nation pay tribute to the creators of so much of the nation’s strength, freedom, and leadership-the American workers.

As you and your family gather for this celebration, may you find comfort and joy in knowing that America still has the strongest, most stable economy in the world, all thanks to those who work for the common good every day. 1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations

1 – www.dol.gov

 

 

Address These Retirement Planning Priorities After 50

When you turn 50, you start to think practically about the steps of your retirement transition. A to-do list emerges of tasks to try and accomplish, as well as things to consider.

Now is the time to pour all you can into your retirement savings. As an example, say you direct $15,000 annually into your workplace retirement account from age 55 to 65. If it returns 6%, you’ll see $48,000 growth off those $150,000 in salary deferrals. An additional $198,000 sounds nice, but keep in mind that your annual contribution ceiling rises to $24,000 starting at age 50. Contribute $24,000 annually to that retirement account returning 6% across those ten years, and you will have an added $316,000 for your “second act” including $76,000 in growth.* Whittling down your debt should also be a goal. About 30% of seniors have outstanding home loans, and the average household headed up by seniors age 65-69 carries nearly $7,000 in monthly credit card charges. Are your investments too bullish? It may be time to reduce the amount of equities in your portfolio. Thanks to the recent rally on Wall Street, there may be a higher percentage of your invested assets in stocks than you assume, and that could expose you to more risk than you prefer.1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – fool.com/retirement/2017/07/16/5-retirement-questions-to-ask-yourself-in-your-50s.aspx [7/16/17]

Saving More Money, Now & Later

You could save today & tomorrow, often without that penny-pinching feeling.

Directly & indirectly, you might be able to save more per month than you think. Hidden paths to greater savings can be found at home and at work, and their potential might surprise you.

Little everyday things may be costing you dollars you could keep. Simply paying cash instead of using a credit card could save you four figures annually. An average U.S. household carries $9,000 in revolving debt; as credit cards currently have a 13% average annual interest rate, that average household pays more than $1,000 in finance charges a year.1

The typical bank customer makes four $60 withdrawals from ATMs a month – given that two or three are probably away from the host bank, that means $5-12 a month lost to ATM fees, or about $60-100 a year. A common household gets about 15 hard-copy bills a month and spends roughly $80 a year on stamps to mail them – why not pay bills online? Automating payments also rescues you from late fees.1

A household that runs full loads in washing machines and dishwashers, washes cars primarily with water from a bucket, and turns off the tap while shaving or brushing teeth may save $100 (or more) in annual water costs.1

Then, there are the big things you could do. If you are saving and investing for the future in a regular, taxable brokerage account, that account has a drawback: you must pay taxes on your investment income in the year it is received. So, you are really losing X% of your return to the tax man (the percentage will reflect your income tax rate).2  

In traditional IRAs and many workplace retirement plans, you save for retirement using pre-tax dollars. None of the dollars you invest in those plans count in your taxable income, and the invested assets can potentially grow and compound in the account without being taxed. This year and in years to follow, this means significant tax savings for you. The earnings of these accounts are only taxed when withdrawn.2,3

How would you like to save hundreds of dollars per month in retirement? By saving and investing for retirement using a Roth IRA, that is essentially the potential you give yourself. Roth IRAs are the inverse of traditional IRAs: the dollars you direct into them are not tax deductible, but the withdrawals are tax free in retirement (assuming you abide by I.R.S. rules). Imagine being able to receive retirement income for 20 or 30 years without paying a penny of federal income taxes on it in the years you receive it. Now imagine how sizable that income stream might be after decades of potential compounding and equity investment for that IRA.4

Many of us can find more money to save, today & tomorrow. Sometimes the saving possibilities are right in front of us. Other times, they may come to us in the future because of present-day financial decisions. We can potentially realize some savings by changes in our financial behavior or our choice of investing vehicles, without resorting to austerity.

*All investing involves risk including loss of principal

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – realsimple.com/work-life/money/saving/money-saving-secrets [7/13/17]

2 – investopedia.com/articles/stocks/11/intro-tax-efficient-investing.asp [8/5/16]

3 – blog.turbotax.intuit.com/tax-deductions-and-credits-2/can-you-deduct-401k-savings-from-your-taxes-7169/ [2/7/17]

4 – cnbc.com/2017/05/15/personal-finance-expert-do-these-6-things-to-save-an-extra-700-per-month.html [5/15/17]

 

When Baby Boomers Become Elders, Will Their Kids Provide Care?

Right now, millions of baby boomers provide informal, unpaid eldercare to parents in their eighties and nineties. This obligation has led some boomers to retire earlier. The Center for Retirement Research at Boston College says that men who play these caregiving roles are 2.4% less likely to stay in the workforce than their peers. Women are more likely to leave the office under such stress, and the CRR estimates that those who do balance a career and eldercare work 3-10 hours less a week and earn an average of 3% less than other working women.

Fewer middle-aged adults may be available to care for baby boomers who become elders. Divorce and geographic separation of families may worsen this dilemma. Additionally, nearly all baby boomers will be age 70 or older by 2033 – the date when the Social Security Trust Fund is projected to run dry, and a 20% reduction in Social Security benefits has been mentioned as a possible consequence. Rising nursing home costs and the financial strain of caregiving may eventually lead federal agencies and the private sector to a collaborative response to meet a pressing need for economical eldercare.1

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – cbsnews.com/news/boomers-elder-care-financial-burden-on-children/ [6/6/17]

Understanding the Gift Tax

Most of us will never face taxes related to money or assets we give away. 

“How can I avoid the federal gift tax?” If this question is on your mind, you aren’t alone. The good news is that few taxpayers or estates will ever have to pay it.

Misconceptions surround this tax. The I.R.S. sets both a yearly gift tax exclusion amount and a lifetime gift tax exemption amount, and this is where the confusion develops.

Here’s what you need to remember: practically speaking, the federal gift tax is a tax on estates. If it wasn’t in place, the rich could simply give away the bulk of their money or property, while living, to spare their heirs from inheritance taxes.

Now that you know the reason the federal government established the gift tax, you can see that the lifetime gift tax exclusion matters more than the annual one.

“What percentage of my gifts will be taxed this year?” Many people wrongly assume that if they give a gift exceeding the annual gift tax exclusion, their tax bill will go up next year. Unless the gift is huge, that won’t likely occur.

The I.R.S. has set the annual gift tax exclusion at $14,000 this year. What this means is that you can gift up to $14,000 each to as many individuals as you like in 2017 without having to pay any gift taxes. A married couple may gift up to $28,000 each to an unlimited number of individuals tax free this year – this is known as a “split gift.” Gifts may be made in cash, stock, collectibles, real estate – just about any form of property with value so long as you cede ownership and control of it.1

So, how are amounts over the $14,000 annual exclusion handled? The excess amounts count against the $5.49 million lifetime gift tax exemption (which is periodically adjusted upward in response to inflation). While you will need to file a gift tax return if you make a gift larger than $14,000 in 2017, you owe no gift tax until your total gifts exceed the lifetime exemption.1

“What happens if I go over the lifetime exemption?” If that occurs, then you will pay a 40% gift tax on gifts above the $5.49 million lifetime exemption amount. One exception, though: all gifts that you make to your spouse are tax free, provided he or she is a U.S. citizen. This is known as the marital deduction.2,3

“But aren’t the gift tax and estate tax exemptions linked?” They are. The lifetime gift tax exemption, estate tax exemption, and generation-skipping tax (GST) exemption are conjoined. Sometimes they are simply called the unified credit. If you have already made taxable lifetime gifts that have used up $4 million of the current $5.49 million unified credit, then only $1.49 million of your estate will be exempt from inheritance taxes if you die in 2017.2

That unified credit is portable, however. That means that if you don’t use all of it up during your lifetime, the unused portion of the credit can pass to your spouse at your death. (One footnote: the lifetime GST exemption regarding asset transfer to recipients two or more generations younger than the donor is not portable.)1,2

In sum, most estates can make larger gifts during the individual’s life without any estate, gift, or income tax consequences. If you have estate planning questions in mind, turn to a legal or financial professional, well versed in these matters, for answers.

Mike Moffitt may be reached at Ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor.  Cornerstone Financial Group and AIM are separate entities from LPL Financial.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – natlawreview.com/article/2017-estate-gift-and-gst-tax-update-what-means-your-current-will-revocable-trust-and [12/6/16]

2 – taxpolicycenter.org/briefing-book/how-do-estate-gift-and-generation-skipping-transfer-taxes-work [6/26/17]

3 – investopedia.com/terms/u/unlimited-marital-deduction.asp [6/25/17]

What if Your Debit Card Gets Cloned?

Responses to a worst-case scenario.

You find out a crook is using your debit card for ATM withdrawals. Or, someone has used your personal information to open a new credit card. What do you do?

There is much you should do as soon as possible. As a first step, call one of the three credit bureaus (Equifax, Experian, TransUnion) and request a free, 90-day fraud alert; call one bureau, and it will alert the others. Request fraud alerts and extra security or passwords for your bank, investment, and credit card accounts. Change your PINs and online passwords. Soon after these moves, turn to the Federal Trade Commission (identitytheft.com) and fill out their identity theft affidavit, which can generate written form letters for you to mail to banks and credit bureaus. These letters can either request credit freezes or extended fraud alerts. You should mail these letters with a copy of the FTC affidavit and subsequently file a police report (this will aid the banks and credit bureaus). Keep checking your credit card, investment and/or bank statements as time goes by.2

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.    

Citations.

2 – cleveland.com/business/index.ssf/2017/05/when_someone_is_opening_accoun.html [5/14/17]

 

 

Will You Be Prepared When the Market Cools Off?

Markets have cycles, and at some point, the major indices will descend. 

We have seen a tremendous rally on Wall Street, nearly nine months long, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average repeatedly settling at all-time peaks. Investors are delighted by what they have witnessed. Have they become irrationally exuberant?

The major indices do not always rise. That obvious fact risks becoming “back of mind” these days. On June 15, the Nasdaq Composite was up 27.16% year-over-year and 12.67% in the past six months. The S&P 500 was up 17.23% in a year and 7.31% in six months. Performance like that can breed overconfidence in equities.1,2     

The S&P last corrected at the beginning of 2016, and a market drop may seem like a remote possibility now. Then again, corrections usually arrive without much warning. You may want to ask yourself: “Am I prepared for one?”3

Are you mentally prepared? Corrections have been rare in recent years. There have only been four in this 8-year bull market. So, it is easy to forget how frequently they have occurred across Wall Street’s long history (they have normally happened about once a year).3,4

The next correction may shock investors who have been lulled into a false sense of security. You need not be among them. It will not be the end of the world or the markets. A correction, in a sense, is a reality check. It presents some good buying opportunities, and helps tame irrational exuberance. You could argue that corrections make the market healthier. In big-picture terms, the typical correction is brief. On average, the markets take 3-4 months to recover from a fall of at least 10%.4      

Are you financially prepared? Some people have portfolios that are not very diverse, with large asset allocations in equities and much smaller asset allocations in more conservative investment vehicles and cash. These are the investors likely to take a hard hit when the big indices correct.

You can stand apart from their ranks by appropriately checking up on, and diversifying, your portfolio as needed. Thanks to the recent rally, many investors have seen their equity positions grow larger, perhaps too large. If you are one of them (and you may be), you may want to try to dial down your risk exposure.

Do you have an adequate emergency fund? A correction is not quite an emergency, but it is nice to have a strong cash position when the market turns sour. Are your retirement and estate plans current? A prolonged slump on Wall Street could impact both. Many older baby boomers had to rethink their retirement strategies in the wake of the 2007-09 bear market.

Finally, a deep dip in the equity market should not stop you from consistently funding your retirement accounts. In a downturn, your account contributions, in essence, buy greater amounts of shares belonging to quality companies than they would otherwise.

A correction will happen – maybe not tomorrow, maybe not for the rest of 2017, but at some point, a retreat will take place. React to it with patience, or else you may end up selling low and buying high.

Mike Moffitt may be reached at ph# 641-782-5577 or email: mikem@cfgiowa.com

Website: www.cfgiowa.com

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Michael Moffitt is a Registered Representative with and Securities are offered through LPL Financial, Member FINRA/SIPC. Investments advice offered through Advantage Investment Management (AIM), a registered investment advisor. Cornerstone Financial Group and AIM are separate entities from LPL Financial.

Citations.

1 – money.cnn.com/data/markets/nasdaq/ [6/15/17]

2 – money.cnn.com/data/markets/sandp/ [6/15/17]

3 – fortune.com/2017/03/09/stock-market-bull-market-longest/ [3/9/17]

4 – investopedia.com/terms/c/correction.asp [6/15/17]