On It With Offit Newsletter

On it With Offit

by Ben Offit, CFP®

Interesting Tidbits

The U.S. Now Has More Millionaires Than Sweden or Portugal has people. More than 10.2 million households had a net worth of one to five million dollars in 2018, not including the value of their primary residence. 
- Bloomberg, March 13, 2018

A college degree is worth the cost if you earn a degree that translates into the new economy. The average undergrad college degree earner is expected to earn $2.8 million over her lifetime. The average high school only grad, $1.5 million.
- Center on Education

1 in 2 Americans now say they will work past age 65.  This is triple the number that said the same in 1989.
- Center for Retirement

If you want to feel rich, just count all the gifts you have that money can't buy.
-Inspirational Quotes

In not so surprising news, American prefer warm weather and lower taxes. Last year more Americans moved to Florida than any other state, and more left New York than any other state.
- Source: Census Bureau

Plan for what is difficult while it is easy.
- Sun Tzu

Taking drugs and thinking you are happy is like taking a loan and thinking you have money.
- Thibaut

Ben Offit, CFP® is featured in Baltimore Magazine as a 2019 Five Star Wealth Manager, for the second consecutive year.

To receive the 2019 Five Star Wealth Manager award, researched and managed by Five Star Professional, a wealth manager must meet 10 objective eligibility and evaluation criteria associated with wealth managers who provide quality services to their clients. 1,759 wealth managers in the Baltimore area were considered for the award. 232 were named in 2018. Five Star Wealth Managers which represents less than 13% of the total wealth managers in the area. Wealth managers do not pay a fee to be considered or placed on the final list of 2018 Five Star Wealth Managers. The Five Star award is not indicative of the wealth manager's future performance.

Ben Offit, CFP® is the President of the Financial Planning Association.  Learn more about our Maryland chapter in our new video.

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Is Cash Really King?

The 4th quarter market drop, concluding with the worst December since 1931, had many “investors” fleeing for the exits. The year closed out with several trillion sitting in cash, the most since March 2010.

When we think of risky asset classes, we tend to think of commodities, real estate, stocks, and even some bonds. Cash may be last on the list. Cash, however, has many inherent risks as well, but they aren’t as obvious.

First and foremost, cash is the worst performing asset class in history. Over long periods of time, cash has underperformed all other major asset classes. The more time you spend with a significant portion of your holdings in cash, the higher the probability your portfolio will underperform just about everything.

Second, holding cash for long periods of time practically guarantees that you will not keep up with inflation. Cash guarantees the loss of purchasing power. In essence, your cash becomes worth less and less each year as prices go up and your cash does not. Imagine you put $100,000 in the bank and earn 1% or so a year for 10 years. When you pick up your cash, you may feel pretty good. However, the 1% or so you earned did not keep up with the cost of a stamp, a suit, a candy bar, health care or education (Inflation is one of those things that creeps up on you. (Remember coffee at 25 cents, candy bars for 50 cents?). You may think you made money, but you lost purchasing power.

One reason many “investors” hold cash is to time the market. They do this despite the fact that there has never been a documented, real-world study done by anyone ever showing that moving from the market to cash and back to the market repeatedly works. After all, you need to be right about when to get out, then when to get in, and do it over and over again. On the other hand, there are many real-world studies showing that moving to cash and back does not work and in fact dramatically increases the risk of loss. For a real world example of how harmful market timing can be, just ask anyone that went to cash in early December, scared out by rising rates, China, the U.S. leaving the negotiating table, and the dreaded inverted yield curve. Yes, the market moves sharply down on that news. Unfortunately for those that tried to “sit it out,” the market swiftly adjusted back as the Federal Reserve changed its mind and provided guidance that it would not be raising rates after all, the U.S. and China decided it might be better to talk things through, and that inverted yield curve un-inverted itself. OOPS!!. All kidding aside, this sort of move to cash permanently harms many investors who have spent their entire lives, working tens of thousands of hours to accumulate their savings, only to see a significant chunk of it wiped out due to poor advice, a lack of discipline, or by getting sucked into the hysterical financial media narrative of the day.

So what happens to the investors who stay invested in the broad market instead of attempting to time the market? How many of them have permanently lost money? Zero. Unfortunately, the investor graveyard is full of people who fled to cash for “safety.” When you think of the great investors of all time, like JP Morgan, Templeton, Buffet, etc., you do not find people who go in and out of the market; you find long-term investors who buy more when there is, as Templeton said, “blood in the streets.” Our clients should not be increasing allocations to cash, in fact, where appropriate, clients should put more into the market when the market is down.

Finally, many investors hold cash in the event of financial Armageddon, a situation when the stock market goes to zero or near zero and never recovers. In reality, if we live in a world where Wal-Mart, Nike, McDonalds, Google and the rest of the world’s dominant companies go down and never recover, it will likely accompany a default by the U.S. government on Treasury bonds. How can the U.S. government make its debt payments on its bonds if major U.S. companies have collapsed? Who exactly would be working and paying taxes to cover the debt payments?  In this event, cash is worthless as the FDIC guarantee would essentially mean nothing. If you do not believe America’s major corporations can survive, then the natural conclusion is that the U.S. economic system itself cannot survive. In that event, cash may be the worst asset to own.

Despite all of this, Americans are currently sitting on more than 3 trillion in cash. Of course, the rush to cash started near the stock market bottom last year, at precisely the worst time.

Cash gives people comfort because it does not move around much. It is easy to understand, and it does not “go down.” But there is more to the story than that. While cash brings comfort, it does not keep up with inflation, constantly loses purchasing power, drags down long-term investment returns, and is of no value in the event of a true economic collapse. Keeping short-term reserves on hand is a good idea. Hoarding cash as a long-term investment, not so much.

Source: Peter Mallouk

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Offit Advisors
28 E Susquehanna Ave
Towson, MD  21286
Phone + Fax:  410 600 PLAN (7526)
E – BOffit@OffitAdvisors.com
W- www.OffitAdvisors.com
 
To schedule an appointment with us, click here!

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

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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.

On It With Offit Newsletter

The Original On It With Offit

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SAVE THE DATE!
SATURDAY, OCTOBER 5TH, 2019 - 10 Years in Business Party!

We will be hosting a special party to celebrate 10 years to the day exactly that I started my financial planning business.  We will invite our clients and referral partners, so stay tuned for more information on this!

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Since I started this newsletter for professional purposes, people have commented to me about the clever title "On It With Offit", a play of words on my strange last name.  However, while in high school, I was actually on our high school newspaper, The Pipeline,  for four years.  During that time, people knew me for my original "Get On It With Offit" column, a goofy and philosophical column of random thoughts, rhetorical questions , and dry humor that was also distributed monthly.  I know it's hard to believe, but it actually had a positive reception. 

Eventually during my senior year I became Editor-In-Chief of this newspaper and transitioned the column to a friend of mine which he aptly named "The Downlow from Dave".   This version of my newsletter now is far different than it was over 15 years ago, and I am a different person than I was 15 years ago.  The guy writing the original version never would have guessed he would one day become a financial planner and entrepreneur.  

What were you doing and where were you 15 years ago?  If you would like to share, I would love to hear it.

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Interesting Tidbits

Just over a decade ago, 62% of Americans were invested in the stock market. Today, we are at the lowest level of American stock market investors in decades, at approximately 50%. Over this period, the stock market more than doubled.
-The Street

That top 1% you keep hearing about? Here’s what it takes in annual income around the world: $81K in India, $105K in China, $215K in France, $478K in the U.S., $694K in Singapore and $891k in U.A.E.
-Bloomberg

There were 3.85 million-American babies born in 2017, the lowest number since 1987.
-BBC News

The day after the Super Bowl is the #1 sick day every year and a third of all American workers believe it should be considered a national holiday.
-Fox 28, Spokane

Approximately 224 million roses are grown for Valentine’s Day and 15% of women admit they will send flowers to themselves.
-Crazy Valentine's Day Facts

The only member of the British House of Commons who is not allowed to speak is the person called the Speaker of the House.
-Wikipedia

The S&P 500 jumped 7.87% in January of 2019, its best January performance since 1987.
-CNBC

“Honest criticism is hard to take, particularly from a relative, a friend, an acquaintances, or a stranger.”      
-Franklin P. Jones

Market Commentary

Highlights

• After one of the worst months for the S&P 500 Index in almost a decade, equities bounced back strongly in January to begin 2019 on a positive note.

• The yield on the 10-year US Treasury dipped sharply in early January, hitting its lowest intraday yield level since early 2018. Although markets were more in a “risk on” mode for most of January, a more dovish stance by the Fed kept rates in check in the latter part of the month. Most pockets of fixed income turned in gains to begin the year.

• The government remained shut down for most of January, although a temporary agreement was made late in the month to re-open the government through mid-February. As a result, some economic data was not released in January, but data that was released continues to point to economic growth.

• Despite ongoing headline risks, we believe fundamentals are what matter in the long-run and current economic indicators remain positive.

 
Equity Markets

After a tough December and fourth quarter for equities, most investors were glad to turn the page from 2018 and move on to 2019. Pessimism had reached extreme levels and market metrics pointed toward oversold conditions late in 2018. Stocks across the board snapped back sharply to begin the new year as a “risk on” attitude ensued. January turned out to be a much more positive environment for equity investors with broad gains enjoyed across many parts of the equity markets.

The numbers for January were as follows: The S&P 500 advanced 8.01%, the Dow Jones Industrial Average rose by 7.29%, the NASDAQ Composite gained 9.79%, and the Russell 2000 Index, after being one of the worst pockets of equities in 2018, rallied 11.25% for the month. Growth stocks, as measured by the Russell 1000 Growth Index, resumed their leadership compared to value stocks, as measured by the Russell 1000 Value Index, gaining 8.99% and 7.78%, respectively, in January.

International equities also rallied in January. Trade issues with China continue to loom, but headwinds like multiple rate hikes in the U.S. and dollar strength will likely be less intense for international equities in 2019. With this backdrop, emerging market equities, as measured by the MSCI Emerging Markets Index, gained 8.77% in January. The MSCI ACWI ex USA Index, a broad measure of international equities, performed strongly as well as it advanced by 7.56% during the month.

Fixed Income Markets

Although there was more of a “risk on” appetite to the markets in January, yields moved lower and created a positive backdrop for broad areas of fixed income to begin the New Year as well. The yield on the 10-year U.S. Treasury declined during the month from 2.69% to 2.63%.
High-yield bonds were exceptionally strong in January and benefited from the “risk on” attitude, but most pockets of fixed income also advanced in January. Overall, the Bloomberg Barclays U.S. Aggregate Bond Index gained 1.06% in January, keeping up strong momentum from December.

The Bloomberg Barclays U.S. Credit Index gained 2.16% and the Bloomberg Barclays U.S. Aggregate Corporate High Yield Index advanced by 4.52% in January. TIPS and muni bonds also gained during the month.

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.

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Offit Advisors
28 E Susquehanna Ave
Towson, MD  21286
Phone + Fax:  410 600 PLAN (7526)
E – BOffit@OffitAdvisors.com
W- www.OffitAdvisors.com
 
To schedule an appointment with us, click here!

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

On it with Offit Newsletter

Market Update - Questions Answered

What’s Causing the Recent Market Downturns?

There are a few factors contributing to recent market volatility:

1. Concerns about a trade war with China are ongoing - However, we believe this will be resolved in negotiations before it comes to a full-blown trade war.

2. Fears of a government shutdown - However, it’s important to note that government shutdowns have happened before and have never had a lasting impact on the economy.

3. Year-end tax loss selling – this puts pressure on stocks, which are already down. However, this is cyclical and should finish its course by the end of the day December 31st.

4. Fear among investors – this causes investors to sell out of their holdings and go into cash.

What Should We Be Focusing On Now?

Historically, we experience a 10% correction about once a year. While 2018 has experienced two of such corrections, we did not have one in 2017, so it balances out. We have also historically experienced a 15% correction about every two years. The S&P 500 was down 15% from its high at close on December 20 but remember—the last time we had a 15% correction was June 2012!

When corrections do occur, the average takes about 3.5 months to hit bottom and another 4.7 months to fully recover to its prior peak.

Also, having an experienced advisor and a diversified portfolio is key to weathering the turbulence. A change in market dynamics is likely to be accompanied by a change in market leadership. What has done well in the past may very well struggle in the period ahead. The diversification message is sometimes dismissed by investors in periods such as this year when every major asset class suffered a negative return. But the reality is that sometimes the benefit of diversification is holding asset classes or strategies that lost less than investors would have experienced in an all large-cap US equity portfolio.

What is The Bottom Line?

While volatility remains, now is not the time to panic. We believe this is a normal correction within an ongoing bull market, and the best thing investors can do is to stay the course.  We will continue to monitor and update the market conditions and your portfolio and planning relative to that.  Stay tuned for more communication and updates in the weeks and months ahead.

I wish you a great and safe evening tonight and a prosperous 2019!

Sincerely,
Ben Offit, CFP®

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. 
 

Offit Advisors
28 E Susquehanna Ave
Towson, MD  21286
Phone:  410 600 PLAN (7526)
E – BOffit@OffitAdvisors.com
W- www.OffitAdvisors.com
Fax: 410 826 7639

To schedule an appointment with us, click here!

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

On it with Offit Newsletter

Better Than Between Two Ferns!

Ben Offit, CFP®, Principal of Offit Advisors and incoming President of the Financial Planning Association of Maryland discusses his company's rebrand, the state of the financial services industry, his plans and vision for the FPA of Maryland, and more in this interview with Elville and Associates' principal Stephen R. Elville.

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MARKET COMMENTARY

Equity Markets

Equities went on quite a ride in November. Following the worst month in years in October, the S&P 500 rebounded sharply at the outset of November only to slide back down, hitting the lowest closing level since April. However, equities picked up momentum once again later in the month, boosted in part by a change in tone by Fed Chairman Powell This resulted in gains overall in November. Compared to much of the late summer and early fall, volatility remained elevated. But it did not hit the levels seen during the market sell-off in October.

Large cap equities fared better than small caps during November, but the disparity was not as pronounced as was the case in recent months. The numbers for November were as follows: the S&P 500 gained 2.04%, the Dow Jones Industrial Average rose 2.11%, the NASDAQ Composite advanced only 0.49%, and the Russell 2000 Index increased 1.59%.

Growth stocks, as measured by the Russell 1000 Growth Index, lagged value stocks, as measured by the Russell 1000 Value Index, gaining 1.06% and 2.99%, respectively. However, growth still enjoyed a clear advantage over value on a year-to-date basis from a style perspective, as did large cap stocks compared to small cap stocks.

International equities posted gains in November, with emerging markets bouncing back after some of the weakest results of any asset class throughout the year. The positive news out of the G20 meetings largely occurred after the final trading day of November, but markets started December off strongly after a trade war truce between the U.S. and China was announced.

Emerging market equities, as measured by the MSCI Emerging Markets Index, gained 4.12% over the month. While this was one of the best overall asset classes in November, emerging market equities remain one of the weakest asset classes in 2018. The MSCI ACWI ex USA Index, a broad measure of international equities, gained 0.95% in November. Both of these indices are still down double digits on a year-to-date basis in what has been a very difficult year for international equities following strong gains in 2017.

Fixed Income Markets

The yield on the 10-year U.S. Treasury declined during the month from 3.15% to 3.01%. Yields on treasuries maturing in one year or less increased, and as a result the yield curve flattened significantly during November. The three-month to 10-year Treasury spread decreased to 64 basis points from 81 basis points. The decline in yields beyond the one-year maturity point created a more constructive backdrop for most fixed income sectors, with the exception of corporate bonds, and most notably high-yield bonds.

For much of the year, high-yield bonds had been one of the few pockets of strength in fixed income, but this bond sector had some of the sharpest declines in November with the Bloomberg Barclays U.S. Aggregate Corporate High Yield Index declining 0.86% during the month. Despite those declines, high-yield bonds remained fractionally positive on a year-to-date basis, up 0.06% through the first eleven months of 2018.

The declining rate environment helped the U.S. Treasury market show gains across the board during the month. Overall, the Bloomberg Barclays U.S. Aggregate Bond Index gained 0.60% and the Bloomberg Barclays U.S. Credit Index slid modestly lower, down 0.07%. TIPS and municipal bonds also gained during the month.

Outside of high-yield bonds, municipal bonds, and the front end of the U.S. Treasury curve, most bond sectors remained in negative territory heading into the final month of the year. The widely followed Bloomberg Barclays U.S. Aggregate Bond Index is down 1.79% so far this year and should returns stay negative to close out 2018, it would mark only the fourth time since the index’s inception in 1976 that this index has recorded a negative calendar year.

Interesting Tidbits

Over the past two years, the average price of a Christmas Tree rose 17% from $64 in 2015 to $73 in 2017.
-Bloomberg, November 13, 2018

Of the $43 billion in U.S. music sales generated in 2017, the musicians took home only $5.1 billion of that, or 12%.
-Business Insider, August 7, 2018

With sales of $288 million, orchids are now the most valuable potted plants in the America, having edged out poinsettias for that distinction over the past decade.
-Numlock, October 4, 2018

In the U.S. between Thanksgiving and New Year’s Day, waste increases about 25%, or one million extra tons compared with the rest of the year. That includes about 38,000 miles of ribbon, enough to tie a bow around the entire Earth
-Waste360, December 11, 2017

Since WWII, the average correction for the S&P 500 lasts 4 months and sees equities slide 13%. The average loss for a bear market is 30.4% and lasts 13 months.
-CNBC, October 26, 2018

Over the past 20 years, there have been more than a dozen local and state elections in the United States that either were decided by a single vote or ended in a tie.
-NPR.org

The average monthly cost for U.S. childcare now sits at $1,385- inching closer to the country’s median rent of about $1,500.
-BNNBloomberg, August 29, 2018

“The trouble with having an open mind, of course, is that people will insist on coming along and try to put things in it.”
-Terry Pratchett

History shows that the midterm elections act as a launching pad for stocks. The S&P 500 has been higher each year after every midterm election since World War II- a perfect 18 for 18.
-USA Today, November 8, 2018

To be in the top 1% worldwide, you need a net worth of $871,320 in U.S. dollars. To be among the top 10%, a net worth of $93,170 will do it. If you just have $4,210 to your name, you are still richer than half of the world’s residents.
-Credit Suisse 2018 Global Wealth Report

It is expected that this year will be the first trillion-dollar holiday season, with a total projection of $1.002 trillion in retail sales between Nov 1 and Dec 31, 2018.
-Quartz, November 6, 2018

Cable and satellite TV providers lost about 1.1 million subscribers in the third quarter of 2018, the largest quarterly loss ever- and the first time the industry lost more than 1 million subscribers in a quarter. Today, 78% of U.S. TV households subscribe to some form of Pay-TV service, down from 86% in 2013.
-USA Today, November 7, 2018

“Trendy is the last stage before tacky.”
-Karl Lagerfeld

In October and November 2018, my wife and I were fortunate to travel to Israel. It is a fascinating place for all of humanity, regardless of your faith. There is incredible history where you can literally see places from Biblical times for all of the major monotheistic religions, diverse and beautiful geographic landscapes (sea, desert, mountains, city skylines), great food, and fun culture.

This is my wife and I at the Dead Sea on Halloween (October 31st, 2018), which is the lowest point on Earth and the salt content of the water is extremely high, therefore there are no living plants or animals in the sea and you can float in the water very easily.

The Top Ten End of 2018 Planning Checklist

1. Will you itemize or take the standard deduction on your 2018 return? 
The Tax Cuts and Jobs Act of 2017 (TCJA) made sweeping changes to the individual and corporate tax system.  As a result, many taxpayers will benefit from the reduced tax rates and increased standard deductions, while others may pay more due to capped and/or eliminated deductions. That makes it important to understand whether or not you’ll be in a position to itemize when filing your 2018 return. If you’re on the fence, there may be strategies you can still put in place this year to push itemized deductions over the 2018 standard deduction limits of $12,000 for individuals and $24,000 for married couples filing jointly. If you’re not sure where you stand, get in touch with us or your CPA as soon as possible.

2. Verify Your W-4 Withholding
Changes in the federal tax law made it necessary for taxpayers to re-evaluate their paycheck withholding for 2018. The IRS introduced new tax withholding tables earlier in the year. If you have not yet evaluated your withholding for tax-year 2018, consider a quick “paycheck checkup” using the online IRS withholding calculator. Be sure any changes in your life—marriage, divorce, the birth of a child—are reflected in your allowances. The goal here from a strategic tax planning perspective is to reduce the potential for any surprises in the form of a high tax bill or too high of a refund when filing your taxes next April. Remember, getting a big tax refund isn’t all it’s cracked up to be. It simply means that you were providing Uncle Sam with a short-term, no-interest loan.

3. Maximize Your Retirement Account Contributions
 Now is the time to maximize contributions to your retirement accounts. If you participate in a company sponsored 401(k) plan, try to meet your employers’ matching contribution at the very least so you’re not leaving “free” money on the table. Additionally, you may want to increase your own contribution in an effort to get closer to the maximum amount allowed; $18,500 for 2018 or $24,500 if you’re age 50 or over. If you contribute to an IRA, you have until April 15, 2019 to make a 2018 IRA contribution. The maximum you can contribute to an IRA for tax-year 2018 is $5,500 plus an extra $1000 catch-up contribution, if you are age 50 or older.

4. Check Your Flexible Spending Account Balances 
There is still time to take a look at your flexible spending accounts (FSAs). The “use it or lose it rule” generally applies to your flex accounts. You may also want to check with your employer to see if they have adopted a grace period allowed by the IRS to set aside 2018 money into the beginning of 2019.

5. Maximize HSA Contributions
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers enrolled in a high-deductible health plan (HDHP). HSA funds may only be used to pay for qualified medical expenses. The 2018 annual contribution limit for individuals is $3,450 and $6,900 for those covered under qualifying family medical plans. Funds in an HSA grow tax-free and unlike an FSA, can grow from year to year.

6. Check Your Required Minimum Distributions
If you’re age 70 ½ or over and required to take distributions from your traditional IRA or other qualified retirement accounts, do a quick verification to ensure you’ve satisfied your distribution for 2018 to avoid paying up to a 50 percent excise tax if you fail to take the appropriate distribution.

7. Consider Tax-Loss Harvesting - Taxes should never be the only reason to sell an asset, but if you’re looking to make a change in your portfolio, selling out of a position with an unrealized loss can help offset other gains. Before taking action, be sure to consult with your tax advisor to see if it would be valid to book a loss before year end to offset any realized taxable gains.

8. Rebalance Your Investment Accounts
Has your portfolio shifted more than you realize.  Now is a good time to take inventory of your retirement plan from your job and other investment accounts to see if you need to recalibrate your account back to your desired asset allocation.

9. 2019 Company Plan Changes
Have you thoroughly reviewed your company employee benefits for 2019?  Do you need to make additions, subtractions, or changes depending on your family dynamic or changes to the plan?  Also, perhaps your company has updated their investment lineup options through their retirement plan and you may need to update accordingly?

10. Your 2019 Goals
Start thinking about what you want out of 2019 for your self, your family, your business.  Based on your desires, are there action items you can take now to put yourself in a position to actually achieve this or move closer to this goal in 2019?  Perhaps it is a family vacation, perhaps it is a large purchase, or perhaps it is taking more time off.  Let us know if we can help you forecast and make your vision a reality.

Partial credits to Forbes.com

On it with Offit Newsletter

We have rebranded our company name to Offit Advisors!  Click the video above for more information.

As we enter the Holidays, we are thankful for many exciting things:
 
● Our best year ever in the business.
● I will become the President of the Financial Planning Association in 2019.
● I helped found the Terp Entrepreneur Network, the first organization ever specifically for University of Maryland business owners.
● We were named a Five Star Wealth Manager for the second year in a row.
● We will have a 10 year anniversary party on Saturday, October 5th, 2019 to celebrate our 10 years in business! 
● I am celebrating 5 years of marriage to my amazingly beautiful wife this month!
 
But most importantly –we are thankful for you.  Thank you for your trust and confidence in us.  It means the world to us to have the opportunity to serve you, and we will not let you down.
 
We hope that you enjoy the holidays with your family and friends with love, joy, and meaning, and I look forward to seeing you soon.

Sincerely,

Ben Offit, CFP®

All About Ray Ray

Many of you know that my wife and I are real dog-lovers and we are borderline obsessed with our adopted Dachshund-Terrier Mix, that we affectionately call Ray Ray. 

We both grew up with Dachshunds during our childhood and that was our first common connection as a couple.  

She is a rescue that we found online and she was transported to us from Arkansas.  We had to pick her up at 1 AM in the morning at a strip mall outside of Hagerstown, MD after she had been in a van with other dogs for days.  She was extremely dirty and was shaking with nervousness, but we all had love at first sight.

We wish we could learn more about her life before us, but unfortunately we don't speak Bark and she doesn't speak English.  Whatever the case is, Ray Ray has a lot of anxiety and is attached to our side when we are home and shrieks when we leave her.  Nonetheless, she is a sweetie and we love having her as part of our family - she is our "Furbaby".

This was our first Rescue dog and it has been a great experience all the way around.  There are so many dogs that would love to find a happy home out there, so consider adopting today!  

There is nothing better than coming home to a dog with a wagging tail and a belly rub, and she provides a daily lift of happiness to our lives.  As they say, "Who rescued who?".

Market Commentary

EQUITY MARKETS 

The S&P 500 Index gained in April for the first time since January. However, this widely followed U.S. equity index remained in modestly negative territory for the year to date. At the beginning of the month, the S&P 500 briefly dipped back into bear market territory (down 10% from the late January highs), but it recovered from that point to close out the month on a positive note. Higher capital market volatility coincided with this early month decline in equities, but volatility moderated from that point for the balance of the month. Most major U.S. stock indices, including the S&P 500, Dow Jones Industrial Average, NASDAQ, Russell 1000, and Russell 3000 managed to post modest gains for April, although these indices are still down on a year-to-date basis. The Russell 2000 Index, a measure of small capitalization stocks, also enjoyed gains in April and is now positive for the year to date. Developed international stocks outpaced the major U.S. stock indices for the month, while emerging market stocks declined. No significant performance advantage was evident between growth and value stocks.

FIXED INCOME MARKETS 
The notable rise in 10-year U.S. Treasury yields that began 2018 resumed in April. The yield on the 10-year U.S. Treasury rose 21 basis points during the month and crossed above the important 3% mark, its highest level in over four years. Overall, this increase in interest rates resulted in negative returns for most fixed income sectors in April. High-yield bonds were one of the few pockets in fixed income that bucked this trend and turned in positive monthly results. The Bloomberg Barclays U.S. Aggregate Bond Index posted negative returns as both Treasuries and investment grade corporates declined in value.
 

Financial Planning Tips
Did you know that the 529 plan has had some updates as part of the recent tax reform?  You can now use the 529 plan to grow money on tax-free basis for college and also Kindergarten-12th grade.

Also, if you utilize the State of Maryland plan, there can be some other benefits.  Maryland offers a $2,500 state tax deduction per account and they recently introduced a Maryland Match Program which would allow $250-500 of matching funds contributed to an account if you meet certain criteria.

There can be some nuance and strategy when using 529 plans, Prepaid Trust Plans, or other account designs.  If you are considering your education planning strategy for you or your family, give me a call today.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

 

On it with Offit

Ben Offit, CFP® and Peter Franchot, Comptroller of Maryland work together at Money Power Day on April 7th, 2018 to help provide free financial guidance and empowerment to the under-served metropolitan Baltimore community.