Stocks Climb A Wall of Worry

Stocks climb a wall of worry.

What does this mean? 

Today, we talk about:

  • The news always seems bad
  • Recessions, trade wars and now impeachment dominate the headlines.
  • But the stock market? What has it done.

We’ll talk about it on this episode of Monday Morning Money.

Watch: Stocks Climb A Wall Of Worry

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We would love to answer your question on a future episode

Do you have a question about money or personal finance? Submit your question using the form below or send an email to neal@flemingwatson.com

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

Listen Now: Stocks Climb A Wall of Worry

You can also watch this on our YouTube Channel.

We would love to answer your question on a future episode

Do you have a question about money or personal finance? Submit your question using the form below or send an email to neal@flemingwatson.com

Stocks climb a wall of worry.

What does this mean? Think about all the stuff which has circulated in the headlines over the past year.

A Looming Recession

We continue to deal with the threat of a recession. A major economic slow down can lead to higher unemployment. It can also impact businesses big and small. In some cases, a recession can mean a bear market.

The talk of a recession tends to darken the mood though, and people’s attitudes tend to sour on things like stocks.

Trade Wars

We are still in the midst of a trade war with China. Something many experts feel could contribute to our economic woes. Both countries are taxing goods imported from the other. This serves to drive prices higher for the consumer.

Officials from both countries continue to talk. Unfortunately, nothing has happened, yet.

Impeachment

And now we can add the possibility of impeachment to the list of big things affecting the mindset of the American public. Regardless of where you stand on this issue, it casts a dark cloud over the future.

What the impact will be? Nobody really knows. Since the 1920’s this has only happened twice, with presidents Nixon and Clinton. Nixon’s problems started in late 1972.  The stock market in 1973 and 74 declined nearly 50%.

Clinton’s problems happened in 1997 and 1998.  In both years, the stock market was up over 20%.

So we don’t have a lot of data to help guide us on what to expect.

Wall of Worry
Stocks Climb A Wall

With all the uncertainty, the dismal news cycle, and overwhelming pessimism, what has the stock market done?

Last Monday – the 28th –  the S&P 500 set a new all-time high.

Stocks Climb a Wall of Worry

At that time the popular large-cap index was up over 23% on a total return basis for the year.

Climb a Wall

On the same day, The Dow Jones Industrial Average closed to within less than 1% of it’s all-time high.  

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This is what it means when people say, “Stocks climb a wall of worry.” The doom and gloom surrounds us. In fact, it is hard to imagine there is anything good happening in the world.  But yet, the stock market just quietly marches higher.

Beneath the noise are great businesses. Companies who find ways to improve profits and deliver value to their shareholders. And sometimes it leads to a pleasant surprise waiting for us when the dust settles.

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Financial Planning

About the Author

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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An Ice Cold COLA

The Social Security cost of living adjustment, or COLA, is designed to help retirees combat inflation.  The SSA recently announced the improvement for 2020.  Spoiler alert:  This is an ice cold COLA.

Video: An Ice Cold COLA

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Every Year, Everything You Buy Costs More.

Every year, everything you buy costs more. That is the simplest way to explain inflation.  When we use the consumer price index, something you bought for $1.00 in 2010 would cost $1.18 today.

One of the key parts of Social Security has been the annual cost of living adjustment—or COLA. This has helped retirees adapt to the constant increase in prices.

COLA

This Year Expect an Ice Cold COLA

Social Security announced the cost of living adjustment for 2020,  and the COLA is ice cold. This year the increase is 1.6%  

For the average benefit, his translates to a monthly increase of $24. Unfortunately, Medicare premiums will also increase next year. The premium should go up almost $9. This means the average net increase from Social Security is only $15 per month.

Not Like It Used to Be

Before 2010, Social Security benefits increased by 3.8% per year. But over the last 10 years, the increases have been far more modest, averaging 1.4% per year.

The statistics don’t always reflect what we see when we go to pay our bills. Some goods and services increase at a faster pace than others. Medical costs are a good example. And as we get older, we tend to incur more medical expenses.

The government is considering a change in how they compute the Social Security cost of living adjustment. But as you know, there is little productive work getting done in Washington DC.

How Does This Impact Your Retirement?

Over the past decade, retirees have had to rely more on their savings to cover their cost of living increases. And we should expect that trend to persist.

Many expect the smaller cost of living increases to Social Security to continue. Likewise, many also expect bigger increases to medicare premiums. This combination results in you getting smaller net increases in your Social Security benefits.

We all need to account for this trend in our plans.  Our savings will be a key element to fighting the constant battle of maintaining our purchasing power.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version: Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

The Question:

“I’m 60 years old and want to retire in a few years. My wife and I have been saving in our 401k’s, but the thought of retiring seems overwhelming. I need to figure this out, where do I start?”

-Tony

The Answer: Where Do You Start?

This is a great question and one we hear quite often. 

Navigating retirement is about managing cash flow. And we need to follow one of the key rules for real-life financial success: spend less than what you earn.

In retirement, our income changes. We go from earning a paycheck to receiving Social Security or a state pension plan. It also means we need to use what we have saved to produce income. For most of us, there is a limit to how much income those resources provide.

So where do you start? Begin with understanding how you spend your money.

Many People Don't Create A Budget

Unfortunately, most Americans don’t know what they are spending.  They are happy if they have money in their bank account when the next paycheck arrives.

According to a survey conducted by the Certified Financial Planner Board of Standards, almost 60% of Americans don’t track their spending. So, unless you are part of the 40% who do, this should be your first task.

Getting Started

Get out those bank statements and credit card bills. It’s time to see where it all goes. It also helps to categorize those expenditures into 3 major categories. Fixed expenses, essential expenses, and discretionary expenses.

Fixed expenses include things which are difficult to change. This is going to include car payments, mortgage, rent, insurance premiums, prescription costs, and taxes.

Essential expenses are necessary items to living, but you do have some control. This will be groceries, your electric bill, cable bill, and other utilities.

Then the discretionary expenses include everything else. Hobbies, eating out, recreational expenses, vacations, entertainment. These are things you could eliminate.

Download Our Free Cash Flow Worksheet

To help you with the budgeting process, we created a free worksheet. You can download it by clicking on the picture to the right. It will help guide you through each of the categories mentioned above.

Where Do You Start

Why Should You Do This?

Why is understanding your spending so important? In our experience, overspending is the biggest threat to your retirement savings. When you can control your spending you improve your chances of longer-term success.

After you go through this exercise you can begin to work on the income part of your retirement puzzle. But that’s a topic for a different episode.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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September Client Letter

September Client Letter

Quarterly reports will be mailed out very soon.  Included with those reports is our September Client Letter.  If you would like to download a PDF copy of the letter, click on th image to the right.

Click image to download

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People are Living Longer

People are living longer. This creates bigger challenges for your nest egg.  

Video: People are Living Longer

Each Episode of Monday Morning Money is also broadcast on Local Radio, WMOA (1490 AM and 101.3 FM).  You can hear it at 11:07 every Monday. 

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In addition, you can also hear this episode on our YouTube Channel.  Please take a moment to subscribe, as it helps our analytics and improves our reach.  This also appears on Facebook and LinkedIn.  

Audio Only Version:  Click Here

What's On Your Mind?

Do you have a question about what’s happening in the world of finance or investing?  Is there a topic that has you curious?  We’d love to hear from  you.

 We’ll do our best to answer it in a future episode.  To submit your question, fill out the form.  If you prefer, you can send us an email directly.  That email address is neal@flemingwatson.com

Enter Your Question Here

Longer Life Expectancies

There is an old joke in the life insurance industry. What is the difference between an actuary and a mob boss? The actuary can approximate when you will die. The mob boss can tell you the date and time.

people are living longer
women live longer

According to the Social Security Administration, a 65-year-old man has a life expectancy of 84 years. Women live longer than men. A 65-year-old female should expect to reach age 87. Keep in mind these are median ages. This means half of the people will live to be even older.

Are you married? The “how long” question becomes more complicated. 

couples live longer
living longer

There is a 51% chance at least one spouse reaches age 90. And there is about a 9% chance both will live that long.

What does this mean to you as you think about your retirement? It means—at a bare minimum— you should plan to live at least 20 years in retirement. But that may not be enough. The Social Security Administration estimates one in four of today’s 65-year-olds will reach age 90. They project 1 in 10 will reach age 95. It is very possible your retirement savings might need to last up to 30 years.

Living Longer Creates Challenges

A couple of weeks ago we shared a statistic with you. Almost half of Americans say running out of money in retirement is their primary concern. The idea you may live 30 years in retirement adds to the stress.

Here is the challenge we all face. Your retirement savings has to:

  • Generate enough income for today.
  • GROW over time to produce MORE income in the future
  • And not go to zero before your pulse does.

And you have to deal with a lot of external forces such as

  • A historically low interest rate environment which shows little sign of improving.
  • A volatile investment world. Which despite current events has always been, and will always be like this.
  • And the ever-present rising costs of the things we buy.

Living Longer Means We Have To Plan Better

This is not an easy puzzle to put together. But it helps if you look at the big picture. Many of the choices you make impact your retirement savings. Here is a quick example of what we mean.

Let’s compare your decision to retire at age 62 vs age 65.

People are Living Longer

Starting your Social Security early results in a permanent reduction of benefits for both you and your spouse. It can result in a larger out of pocket expense for health insurance.

This can place more stress on your savings in two ways. Your savings has to last three years longer, and it may have to generate more income.

But if you wait until age 65, those early Social Security discounts shrink. You are eligible for Medicare.  This can reduce the stress on your savings.

And this is just one example. We face a lot of choices which can impact how long your nest egg will last.

Living longer poses one of the biggest financial challenges to retirees. It requires thoughtful planning and good choices to improve our chances for success.

Stay Informed.

Monday Morning Money is a podcast talking about current events which  impact your bottom line.  

If you would like to be notified when a new episode is released, sign up for our mailing list.  Just complete the form.

Join Our List Today!

* indicates required
Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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No Commissions for Equity Trades

Yesterday, TD Ameritrade announced there would be no commissions for equity trades. They reduced the ticket charge from $6.95 to zero on all stock and option trades. This includes Exchange Traded funds-also known as ETF’s. ETF’s are the largest type of security we use in clients’ accounts.
No Commissions for Equity Trades

What Does No Commissions For Equity Trades Mean To You?

In the past, if we were to sell shares of an ETF and buy another, you would incur a total cost of $13.90. Now, these trades will cost you nothing.
 
This has a positive impact on all our clients. But it has the greatest effect on smaller accounts. Before this announcement, we restricted the funds we used for smaller accounts. TD Ameritrade had a limited list of ETF’s available with no transaction fees. While adequate, this opens the entire universe of funds to these clients. This allows us greater flexibility to manage those accounts.

Mutual Funds Not Included

This reduction in costs does not include mutual funds. TD Ameritrade has over 3,000 mutual funds available to our clients with no transaction fees. We give those funds priority in our selection process. Mutual funds not on the list cost $18 or more for purchases and sales. 

Overall Impact

It is difficult to pinpoint how much this will impact each client, but any cost-cutting measure is a good one. Reducing costs was a primary reason we chose TD Ameritrade as our custodian three years ago. Now they have made it even more affordable for our clients.
 
If you have questions about how this impacts you, please call.