Wealth Management Blog | WrapManager (35)

Eagle Asset Management - Interest Rates and Equity Markets

Posted by WrapManager's Investment Policy Committee

October 27, 2015

Eagle Asset Management's Richard Skeppstrom reviews the Fed's interest rate decision and discusses current equity markets in this month's market perspective.

"Interest-rate constipation

U.S. economic growth was nearly 4 percent in the second quarter and the U.S. Federal Reserve decided to leave rates at 0. It was rumored to be a close call but labor conditions aren’t perfect: too many aren’t looking for work, international markets are unsettled and infl ation remains just below target. I didn’t believe 0.25 percent made any difference anyway but equities weren’t thrilled. You might think that after watching these things for 20-some years, I’d know if the news were good or bad; however, I’m not even sure what the news was in this case. Some countries aren’t well-run? Some people would rather not work? In any case, the Fed still believes it imprudent to pay interest on savings. Congrats to the borrowers.

Small- and Large-Scale Retirement Lifestyle Planning Considerations

October 21, 2015

For many people approaching retirement age, there may be trepidation about how to properly plan for your retirement lifestyle. Unfortunately, without having a trusted advisor along for the ride, the journey toward retirement can feel a lot like planning a trip to the moon without an engineer. There are many unknown aspects about what will happen once you actually retire. How will your new-found freedom affect your spending habits? What will be the state of the economy at that point in time? Will you stay where you are, or travel, or permanently relocate? Hire an Advisor A good first step to successful retirement lifestyle planning is to find a financial advisor that can help to answer questions you have about how your investments can work for you as you approach retirement and beyond. As your employment situation changes, your income will fluctuate and the tax laws regarding your income will also likely change. A knowledgeable advisor will be able to tell you which changes will directly impact you based on your current situation, in conjunction with your CPA, can help formulate a plan to take advantage of the best tax breaks and plan investments accordingly. [+] Read More

How Do U.S. Presidential Elections Affect the Stock Market?

October 14, 2015

National politics are set to take center stage of media coverage, gripping the minds and TV sets of many American households. With political TV ad spending expected to eclipse $4.4 billion in this cycle,1 however, and with politicians on both sides jockeying early for a chance to secure the nomination, it feels like the elections are already upon us. With over a year to go for the presidential election, we’d advise you to buckle up – because it’s only going to get more intense from here. To note, WrapManager is not taking a political stance with regard to elections – whether Democrats or Republicans control the White House and/or Congress is up to the voters. Our concern is the market and the economy, which while affected by politics, is not wholly controlled by it – there are plenty of other variables to consider. In the past, election outcomes have formed patterns in the stock market, which may offer us clues for what to expect as the race takes shape. We’ll take a look at a few of those below. [+] Read More

Harvesting Losses - Doug's Quiz Corner

October 13, 2015

Quizmaster Doug Hutchinson has come up with another great quiz that explores the effect of harvesting losses. Let’s see what the math has to say. Good luck! First, a definition of tax loss harvesting. Tax Loss Harvesting is the practice of selling a security that has experienced a loss. By realizing, or "harvesting" a loss, investors are able to offset taxes on gains. The sold security may be held in cash or replaced by a similar one (keeping in mind wash sale rules), to help maintain the optimal asset allocation. [+] Read More

Earnings Tumbled - Should You Worry About Your Investment Portfolio?

October 7, 2015

Corporate earnings had a rough go of it in the second quarter—total earnings for S&P 500 companies were down -2.1% from the same period last year, on -3.4% lower revenues.1 It would be one thing if earnings were falling while revenues went up, which would indicate companies may have spent more over the quarter on fixed investments, more hires, or higher wages, for example. But the data clearly shows that top line revenues are falling alongside earnings, which means there could be an issue with softening demand. As you can see from the chart below, earnings also fell from the fourth quarter of 2014 to the first quarter of 2015. With earnings getting weaker as market volatility increases and China worries build, investors may wonder if a more cautious portfolio strategy is warranted from here. [+] Read More

Cash Vs. Mortgage in Your Retirement Lifestyle Planning

October 6, 2015

Many people approaching retirement consider where they will live during their retirement years. Relocating to a more affordable or comfortable area could be an important part of your retirement lifestyle planning. Even if you plan to remain in your current home, however, your family nest egg will be influenced by your home financing. Cash vs. Mortgage Different schools of thought exist about whether it’s best to pay off your home and live debt free or carry a mortgage during your retirement years. It seems like a simple decision, but several factors complicate this decision. Further, there isn’t a one-size-fits-all answer to this question. Depending on your personal retirement lifestyle planning goals and your current situation, one of these options will likely be more advantageous than another. Your financial advisor can help you sort out the ramifications of whether to pay off your mortgage, carry a loan, or consider a reverse mortgage. [+] Read More

Eagle Asset Management - Market Volatility Perspective

September 30, 2015

Eagle Asset Management's Richard Skeppstrom says we're in no danger of a recession and asks investors not to panic. Continuing market volatility and the possibility of a slight increase in interest rates do not necessarily spell disaster. "Don't Panic The market’s momentum was ebbing with the slowing of global growth. The return of volatility was inevitable and corrections are a fact. People panic for a reason; there’s generally no shortage of reasons and happily there are very few good ones. Unfortunately, in the last 15 years, we’ve had two wrenching stock collapses and they remain fresh in everyone’s minds. In the first, the U.S. Federal Reserve tightened to rein in the tech bubble (that it had ignored/blessed) and associated nonsense but there’d been too much excess and the economy fell into recession. In the second, the Fed tightened to rein in the housing bubble (that it created) and associated nonsense but there’d been too much excess and the banking system nearly collapsed, dragging the economy into the Great Recession. [+] Read More

Your Retirement Planning Strategy: The Key Players

September 29, 2015

When it comes to a retirement planning strategy, no person is an island. The decisions you make regarding your retirement will affect other people, and their plans will affect your strategy. Therefore, it’s critical to consult with members of your family, your spouse, professionals you work closely with, and your financial advisor as you develop your retirement planning strategy. Let’s take a closer look at the reasons behind this collaborative approach to your retirement plan. Work with Your Spouse If you're married, the most important person you should consult with on your retirement plan is your spouse. Together, you have tackled financial issues for years, and together you’ll plan for the future. Whether or not your spouse has worked in the past will greatly impact your retirement planning strategy. How much will your spouse collect in Social Security payments? Does your spouse have a pension, 401(k), or IRA that you’ll need to factor into your strategy? How is your spouse’s health? Will your spouse’s health care impact your future financial needs? [+] Read More

Managing Market Risk with Long-Term Investing

September 23, 2015

After recent financial ups and downs, managing market risk is on investors’ minds. Volatility in the markets can make people nervous, but it’s important to remember that risk is always present when it comes to investing. Even conservative investments like certificates of deposit (CDs) carry the risk of inflation. And yet, investing is a very important component for growing your wealth over time. How much should you worry about managing market risk? What can you do when the market becomes exceptionally volatile? [+] Read More

How Rising Interest Rates Affect Stocks and Bonds

September 16, 2015

Recent stock market volatility has given way to renewed curiosity over when the Federal Reserve (Fed) will start to raise interest rates in the U.S. A recently released poll by the National Association of Business Economics showed that just 37% of surveyed economists believed the Fed would hike rates in September, meaning that a majority of those surveyed think it will come even later in the year (if not next year).1 The question on many investors minds, however, isn’t so much when the Fed will start to raise interest rates, but how it will affect the economy and the stock market. Theoretically, as the Fed starts to raise interest rates, it becomes incrementally more costly for businesses and individuals to borrow money—meaning that economic activity could feel some headwinds over time. Investors often worry that rising interest rates could thus mean choking off the already fragile economic expansion, and that a slowing economy could mean falling stock prices. [+] Read More