Offit Advisors Attend Kestra Ascend in Palm Springs
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Offit Advisors CEO, Ben Offit and Financial Advisor, Laura Sendldorfer were on the ground at the Kestra Ascend conference in Palm Springs, California for a few days of investment due diligence, practice management consulting, and networking with other top advisory firms from around the country. They not only got to enjoy the beautiful scenery, but also interacted with executives and discussed planning for 2024, and beyond.
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Did you know that that it may be beneficial for FAFSA planning in 2024 to move 529 accounts into being owned by Grandparents instead of parents? This can help increase eligibility to receive financial aid.
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An Important Planning Reminder:
Clients will receive their investment 1099s, 5498s, etc by end of February and to use on their taxes!
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We unfortunately had a friend of the practice become a victim to financial fraud. We want to make our clients aware of any potential red flags or fishy situations. We learned about this upcoming presentation and though it could be helpful to share:
Seniors and their families will have the opportunity to learn about elder fraud abuse from a member of the Federal Bureau of Investigation's Baltimore office. The presentation is scheduled for Tuesday, March 5th at 7:30 p.m. at the Brightview senior living community in Perry Hall, 9657 Belair Road, in the Dorsey Room. The forum is cosponsored by the office of Baltimore County Councilman David Marks, the Perry Hall Improvement Association, the Perry Hall/White Marsh Business Association, and the Woman's Club of Perry Hall. FBI Agent Sarah Lewis works for the FBI Baltimore office, Financial Crimes Squad. For the past three years, she has been investigating financial scams, mostly romance and tech fraud, that are victimizing such a large number of our retired community. In an effort to try to prevent these schemes, she has been doing outreach in the community at senior centers, age 55 and over communities, and larger churches. Agent Lewis will speak about scams, red flags, how to avoid them, current trends, and what to do if you do fall victim. All are welcome, and there is no charge.
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Proactive Financial Planning: Part I
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Financial planning is akin to tending a garden; it requires regular attention, thoughtful care, and occasional pruning to ensure it thrives over time. Here are eight miscellaneous but key tips to consider as part of a comprehensive financial plan:
1) Strategic 401(k) Contributions: Kickstart your year by overfunding your 401(k) early on. By front-loading your contributions, you allow more time for your investments to grow over the year. This tactic takes advantage of dollar-cost averaging, potentially maximizing your returns. However, remember to ensure you receive the full company match throughout the year to optimize your benefits.
2) Annual Cash Flow Review: Regularly assessing your cash flow and spending habits is fundamental to maintaining financial health. Set aside time each year to scrutinize your income, expenses, and savings. Identifying areas of excess spending or opportunities for saving can significantly impact your long-term financial goals.
3) Credit Monitoring and Protection: Safeguarding your financial identity is paramount. Annually check your credit score through platforms like Credit Karma and consider freezing your credit with major bureaus—Experian, Equifax, and TransUnion. This proactive measure helps prevent identity theft and shields against potential data breaches.
4) Beneficiary Designations: Ensure your assets smoothly transition to your intended beneficiaries by reviewing and updating beneficiary designations annually. From bank accounts to life insurance policies, confirming designated beneficiaries minimizes the likelihood of assets going through probate and streamlines the inheritance process.
5) Per Stirpes Consideration: Deliberate on whether per stirpes designation aligns with your estate planning objectives. This legal term ensures assets pass to the descendants of a beneficiary in the event of their death, offering a structured approach to wealth distribution.
6) 529 Plans for Education Savings: Explore the benefits of 529 accounts for future education expenses. Not only do these plans provide tax advantages for in-state contributions, but recent legislation also allows rollovers to Roth IRAs if the funds aren't used for education expenses, offering flexibility in financial planning.
7) Understanding IRMAA: Anticipate how income sources in retirement can impact Medicare premiums through the Income-Related Monthly Adjustment Amount (IRMAA). Being mindful of potential increases in premiums due to higher income levels can inform retirement income strategies.
8) Insurance and Estate Planning Review: Conduct an annual review of your insurance policies, including life, disability, long-term care, and property and casualty insurance. Ensure coverage aligns with your current needs and circumstances. Additionally, keep your estate plan up to date, and communicate its details to your family members for clarity and preparedness in case of unforeseen events.
In conclusion, effective financial planning requires a proactive and holistic approach. By implementing these miscellaneous tips, individuals can navigate their financial journeys with confidence, laying the groundwork for a secure and prosperous future. Stay tuned for more insights in Part 2 of Maximizing Your Financial Planning series
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In the Middle Ages, Valentine’s Day became associated with love and romance, a tradition that came from the common belief in France and England that birds started their mating season on February 14.
Good Housekeeping, December 27, 2023
Nvidia is now worth as much as the entire Chinese stock market.
yahoo!finance, February 9, 2024
On Friday, Feb 2, 2024. Meta shares rose more than 20%, adding $205 billion to its market capitalization. To put that into perspective, the world’s 20 largest airlines are cumulatively valued at $210 billion.
Investopedia, February 2, 2024
According to the Federal Reserve, baby boomers hold a massive amount of wealth: The 55.8 million Americans over 65, about 17% of the population, hold $96.4 trillion, which is about half of America’s wealth
Business Insider, October 18, 2024
“Headlines, in a way, are what mislead you because bad news is a headline, and gradual improvement is not.”
- Bill Gates
“I arise in the morning torn between a desire to improve (or save) the world and a desire to enjoy (or savor) the world. This makes it hard to plan the day.”
- E. B. White
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Modest Gains for Stocks, Modest Declines for Bonds to Start the Year
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Highlights
- The solid end to 2023 for stocks continued in early 2024 as all-time highs were achieved for the S&P 500 and Dow Jones Industrial Average. After hitting prior highs at the very start of 2022, these indices – after two long years – marched to record highs once again. However, small-caps struggled to start 2024.
- Coinciding with stock prices at all-time highs, earnings are expected to hit an all-time high in 2023 once fourth quarter data is tallied for S&P 500 companies as well. Earnings are expected to grow once again in 2024 to new highs from the 2023 levels.
- Yields had a dramatic drop over the last couple of months of 2023. After touching 5% intraday in late October – the highest yield level since prior to the credit crisis in 2007 – the 10-year U.S. Treasury yield closed 2023 at 3.88%. Rates bounced up from that point in January and closed the month at 3.99%.
- The FOMC met in late January and as expected, made no change to the Fed Funds rate. However, the Fed dampened expectations of a March rate cut, which sent stocks lower on the final day of the month. The debate now is how rate cuts will unfold in 2024.
- The U.S. economy continues to be much stronger than most expected. The first look at Q4 2023 GDP was another positive surprise with an annualized growth rate of 3.3% compared to expectations of 2.0%. This growth is on the heels of Q3 growth which stood at 4.9%. The U.S. economy has been resilient.
Equity Markets
Stocks started 2024 strongly with the S&P 500 and Dow Jones Industrial Average hitting new all-time highs in January. However, some of those gains were given up at the end of the month as the Fed lowered expectations of a rate cut at the March FOMC meeting. Noteworthy, the market fell back into its recent pattern of large-cap growth outperforming most other areas of the market in January. For example, the Russell 1000 Growth Index gained 2.49% for the month, while the Russell 1000 Value Index only advanced 0.10%. The equal-weighted S&P 500 Index was down in January while the traditional market-cap weighted S&P 500 Index gained for the month. Small-caps struggled in January after enjoying a double-digit rally in December.
See Table 1 for equity results for January 2024 and calendar year 2023.
Table 1
| Index |
Jan 2024 |
2023 |
| S&P 500 |
1.68% |
26.29% |
| S&P 500 Equal Weight |
-0.82% |
13.87% |
| DJIA |
1.31% |
16.18% |
| Russell 3000 |
1.11% |
25.96% |
| NASDAQ Comp. |
1.04% |
44.64% |
| Russell 2000 |
-3.89% |
16.93% |
| MSCI ACWI ex U.S. |
-0.99% |
15.62% |
| MSCI Emerging Mkts Net |
-4.64% |
9.83% |
Source: Bloomberg For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
2023 will be remembered for the dominance of large-cap growth, and 2024 started much the same way. However, the broadening in the market over the last two months of 2023 led to solid gains across the board in equity markets last year. We believe the market could continue to broaden in 2024 with valuations more compelling in small, mid-cap and international stocks.
International stocks continued to underperform U.S. equities with emerging markets among the weakest of the stock market categories to begin 2024. We still see opportunities in international markets with valuations that are lower than the U.S. and our expectation that the U.S. dollar will likely weaken over the short to intermediate-term as the Fed begins cutting rates in 2024.
Fixed Income
After struggling for much of 2023, bonds rallied in November and December to turn in solid results for the year. After peaking in late October, yields dropped sharply through year end, but that drop paused in January. It is a good reminder that yields can move quickly at times and it is important for bond investors to stay focused on their long-term goals during periods of volatility. The 10-year U.S. Treasury yield closed 2023 at 3.88% and it moved up to end January at 3.99% creating a headwind for bonds to begin the new year
See Table 2 for fixed income index returns for January 2024 and calendar year 2023.
Table 2
| Index |
Jan 2024 |
2023 |
| Bloomberg U.S. Agg |
-0.27% |
5.53% |
| Bloomberg U.S. Credit |
-0.18% |
8.18% |
| Bloomberg U.S. High Yld |
0.00% |
13.44% |
| Bloomberg Muni |
-0.51% |
6.40% |
| Bloomberg 30-year U.S. TSY |
-2.70% |
1.93% |
| Bloomberg U.S. TSY |
-0.28% |
4.05% |
Source: Bloomberg. For illustrative purposes only. Indexes are unmanaged and have been provided for comparison purposes only. No fees or expenses are reflected. You cannot invest directly in an index.
The move higher in rates in January was a challenge for most bond sectors. High yield bonds were flat, while more interest rates sensitive bonds like longer-dated U.S. Treasuries came under the most pressure. We expect the 10-year U.S. Treasury yield to drift lower as we move through 2024 and believe it will be in a range between 3.25% and 4.5% during the year. As the Fed begins to cut rates in 2024, we believe this will drive down rates at the front end of the yield curve as well.
We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. We also believe the role bonds play in a portfolio, which is to provide stable cash flow and to help offset the volatility of stocks in the long run, has not changed. Furthermore, we believe that bond yields remain attractive even though rates have dropped from their October highs. In our opinion, having an active bond management approach makes sense in these volatile times.
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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