michele_diamond

3 Financial Developments to be Thankful for in 2020

Mon, 23 Nov 2020 21:17:38 GMT

This year has been a rollercoaster ride. COVID has dominated the headlines and impacted every aspect of our lives. It has shut down businesses, schools, and workplaces. It’s changed the way we interact and socialize. And of course, it has deeply impacted the economy and the financial markets.

It can be hard in 2020 to find the good news, but there actually are a few economic developments for which we can be grateful. There’s also quite a bit of uncertainty ahead of us. As we approach the end of 2020, now may be a good time to reflect on what has transpired over the past 11 months, and what steps you may need to take to prepare for what comes next.

Below are three positive developments that you may want to consider as you prepare for 2021:

The Markets Rebound

COVID ended the longest bull market and longest economic expansion in history. The previous bull market started in 2009 and lasted for nearly a decade before crashing in just a few short weeks over February and January of this year. ¹

Between February 19 and March 23, the S&P 500 fell 33.93%. Since that point, though, the markets have surged. From March 23 through October 29, the S&P 500 is up 47.94% and is nearly back to its pre-COVID levels. ²

As mentioned, though, there is still uncertainty ahead. The COVID pandemic is far from over. There’s also uncertainty about how the results of the election will impact the markets, the economy, and the country’s COVID response.

While the market's rebound is a fortunate turn of events, there’s no guarantee that it will continue. Now is a good time to evaluate your strategy and lock-in any gains before another potential downturn occurs. A financial professional can help you explore options.

GDP Surge

In the second quarter, GDP fell by 31.4%, the largest quarterly drop in history. In the third quarter, it rebounded by 33.1%, the largest quarterly gain in history. That number easily beat the previous record of 16.7% in the third quarter of 1950. ³

Much of the rebound was driven by the service industry and the reopening of much of the economy. Of course, the continuing rise in COVID cases may threaten the economic rebound. Twenty-nine states hit record levels for daily new cases in October. Forty states had an increase of 10% just in the last week of October. ⁴

CARES Act Financial Flexibility

The COVID pandemic and its economic fallout have created financial challenges for millions of Americans. While the government is still debating a second round of stimulus, the first round, known as the CARES Act, continues to provide financial flexibility for those facing difficulties.

As part of the CARES Act, you can withdraw up to $100,000 from your 401(k) or IRA without facing early distribution penalties. The taxes on the distribution can even be spread out over a three-year period. ⁵

Granted, withdrawing money from your 401(k) or IRA isn’t the best strategy for your retirement. However, it is an added measure of flexibility that didn’t exist prior to this year and it could be a blessing if you’re struggling due to the COVID pandemic.

The end of 2020 is approaching. It’s been a rollercoaster ride, but there have been some positive developments, especially in the second half of the year. Let’s talk about how to protect what you have and limit your exposure to future risk and uncertainty. Contact us today at Diamond Retirement Strategies and let’s start the conversation.

1 https://www.cnn.com/2020/03/11/investing/bear-market-stocks-recession/index.html

2 https://www.google.com/finance/quote/.INX:INDEXSP

3 https://www.cnbc.com/2020/10/29/us-gdp-report-third-quarter-2020.html

4 https://www.cnn.com/2020/10/28/health/us-coronavirus-wednesday/index.html

5https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

October Recap: Markets Stumble but GDP Surges

Tue, 10 Nov 2020 21:14:09 GMT

The recovery in the financial markets hit some turbulence in October, as investors wrestled with anxiety about increasing COVID cases. However, a surge in gross domestic product (GDP) in the third quarter may signal that the economy is on the rebound. ¹

Through October 28, all major indexes had mostly recouped most of their losses from the COVID crash in March. However, all were down for the month of October. Below is each index’s return from October 1 through October 28:

S&P 500: -2.73% ²

DJIA: -4.54% ³

NASDAQ: -1.46% ⁴

Here are the year-to-date returns of the major indexes:

S&P 500: 0.40% ²

DJIA: -8.14% ³

NASDAQ: 21.04% ⁴

What spooked the markets in October? There are a few factors, but as is the case with most things in 2020, COVID may be the primary factor.

COVID Cases Ramp Up

The COVID numbers are surging in the United States, suggesting that the end of the pandemic may be nowhere in sight. On Wednesday, October 28, the seven-day average for new daily cases hit an all-time high of 71,832, an increase of more than 20% in only a week. ⁵

Twenty-nine states hit record levels for daily new cases in October. Forty states had an increase of 10% just in the last week of October. ⁶ Thirty-six states had increases of at least 5% in COVID-related hospitalizations in the final week of October. ⁵

The surge in cases is leading to a new round of business closures and regulations. Illinois recently stopped indoor dining at bars and restaurants. ⁷ Investors may be spooked by the prospect of a second round of closures and its impact on the economy. A new report from Yelp found that 60% of businesses that were shutdown for COVID will never reopen. ⁸

Stimulus Outlook

The uncertainty of a second stimulus may also be a drag on the markets. In fact, Gary Cohn, former president and CEO of Goldman Sachs and former White House National Economic Council Director, says it is a primary factor driving the markets’ poor performance in October. ⁹

He added in a recent interview that, “no one thinks we’re going to have stimulus until after the election,” and that, “we know that the markets do not like unpredictability.” He said that there was “100% probability” that stimulus won’t happen until after November 3rd, and possibly not until after the inauguration. ⁹

Fund Flows

Some recent data on mutual fund flows may provide insight into how investors feel about the financial markets. Through October 21, equity funds (including mutual funds and ETFs) saw net outflows for 11 consecutive weeks. That means more money flowed out of these funds than flowed into them. ¹⁰

On the other side, taxable fixed-income ETFs have seen four straight weeks of net inflows. That may mean that investors are leaving equities for fixed income securities, even with interest rates near zero. ¹⁰

GDP Surges in 3rd Quarter

On a positive note, GDP surged by 33.1% in the third quarter, beating analyst expectations of 32%. The third quarter number is the largest quarterly GDP gain on record, easily beating the previous high of 16.7% in the third quarter of 1950. ¹¹

Of course, the third quarter surge comes after a 31.4% decline in GDP in the second quarter. Even with the increase in the third quarter, the economy is still projected to contract by 3.5% in 2020. ¹¹

The markets and the economy have rebounded, but the future is still uncertain. This may be a good time to explore options that can protect your assets from market volatility. Contact us today at Diamond retirement Strategies. We can help you explore these options and implement a strategy to protect your financial future. Let’s connect today and start the conversation.

1https://www.cnbc.com/2020/10/29/5-things-to-know-before-the-stock-market-opens-october-29-2020.html

2 https://www.google.com/finance/quote/.INX:INDEXSP

3 https://www.google.com/finance/quote/.DJI:INDEXDJX

4 https://www.google.com/finance/quote/.IXIC:INDEXNASDAQ

5 https://www.cnbc.com/2020/10/28/covid-cases-hospitalizations-continue-to-surge-as-us-reaches-critical-point-in-pandemic.htm l

6 https://www.cnn.com/2020/10/28/health/us-coronavirus-wednesday/index.html

7 https://www.cnbc.com/2020/10/28/5-things-to-know-before-the-stock-market-opens-october-28-2020.html

8 https://nypost.com/2020/09/17/majority-of-covid-19-business-closures-are-permanent-report/

9 https://finance.yahoo.com/news/stimulus-donald-trump-gary-cohn-markets-100-percent-probability-deal-wont-pass-before-the-election-214720697.html

10 https://lipperalpha.refinitiv.com/2020/10/u-s-weekly-fundflows-insight-report-etf-and-fund-investors-focus-on-fixed-income-during-the-fund-flows-week/

11https://www.cnbc.com/2020/10/29/us-gdp-report-third-quarter-2020.html

What Monsters are Lurking in Your Portfolio?

michele@drstrategies.org (Michele Diamond) — Tue, 27 Oct 2020 15:25:42 GMT

It’s the scariest time of the year. Halloween is here. It’s time for trick-or-treaters, haunted houses, spooky home decorations, and more.

This may be the scariest time of the year, but it only lasts a month. The truth is there could be gaps in your investment strategy that could come back to haunt you for years or even decades. Below are a few common retirement planning mistakes that can have frightening long-term consequences. If any of these sound familiar, it may be time to meet with a financial professional.

Wrong Risk Tolerance

Asset allocation is an important part of any retirement strategy. Your allocation influences your risk exposure and your potential return. Generally, risk and return go hand-in-hand. Assets that offer greater potential return usually also have higher levels of risk. You can use asset allocation to find the right mix of assets for your goals and risk tolerance.

Having the wrong allocation can be problematic. For example, many people have less tolerance for risk as they approach retirement. As you get closer to retirement, you have less time to recover from a loss and thus less tolerance for risk. However, if you don’t adjust your allocation, you could have more risk exposure than is appropriate. A downturn could substantially impact your nest egg.

How can you make sure your allocation aligns with your risk tolerance? A consultation with a financial professional is a good first step. They can analyze your risk tolerance and your portfolio and then suggest action that can eliminate gaps and minimize risk.

No Risk Protection Tools

Asset allocation is one way to reduce risk, but it’s not the only way. You could also use tools that offer growth potential with limited downside exposure. For example, certain types of annuities offer potential growth with downside protection. You can participate in returns linked to the market without experiencing volatility and risk. Annuities aren’t right for everyone, however. Be sure to talk to a financial professional about whether they make sense for your strategy.

Impulsive Decisions

It’s natural to feel stress and anxiety when the market turns downward. Take the first quarter of 2020 for example. When the COVID pandemic began in late February, the S&P 500 declined by 33.93% in a month. You may have felt tempted to sell your investments and move to “safer” assets. However, had you done so, you may have missed out on the market’s bounce back. Since March 23, the S&P 500 has climbed 49.35%.1

The problem with impulsive decisions to move to safety is that they can often suppress your returns over time. From 1995 through 2015, the S&P 500 averaged a return of 9.85% per year. Over that same period, the average equity investor averaged a return of only 5.19%.2

Why the discrepancy in returns? Investors often make decisions based on emotion rather than a long-term strategy. While those decisions may feel right in the moment, they could lead to lost opportunity as the investor misses out on a market recovery. A financial professional can help you focus on the long-term and avoid decisions that may do more harm than good.

Infrequent Reviews

When’s the last time you reviewed your investment strategy with a financial professional? If it’s been a while, now may be the time to do so. A lot can change in a few months or even a year. Your goals and needs may change. Your tolerance for risk could change. Your contributions to your retirement accounts may change. This is especially true during the COVID pandemic, when economic news seems to vary on a monthly basis.

Let’s schedule a review today and find the monsters hiding in your investment strategy. Contact us today at Diamond Retirement Strategies. We welcome the opportunity to consult with you and help you implement the right strategy for your needs and goals. Let’s connect today and start the conversation.

1https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_QQBhX8b3K5K-tQbo56XwCw7:0

2https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519

COVID Economic Update: Fed Chairman Says Recovery Will Take Years

michele@drstrategies.org (Michele Diamond) — Wed, 14 Oct 2020 15:23:27 GMT

On Wednesday, September 16, Federal Reserve Chairman Jerome Powell offered his assessment of the economic recovery. The press conference offered some positive news, but also a sobering prediction that a full economic recovery will take years. ¹

The good news is that the Fed has cut its 2020 median unemployment rate projection to 7.6%, down from a 9.3% forecast in June. The Fed also adjusted its projected 2020 GDP reduction to 3.7%, down from a 6.5% decline that was projected in June. GDP, which stands for gross domestic product, is a broad measure of economic growth. A decline in GDP means the economy is contracting rather than expanding. ¹

Powell also said that the Fed had shifted its focus to employment growth rather than inflation control. That means the Fed expects to keep interest rates at or near zero until the economy is near maximum employment and inflation is projected to exceed 2%. He added that it will likely take years before the economy has reached those thresholds. ¹

While low interest rates may be good for borrowers and investors, Powell’s comments indicate that the Fed believes the economy is years away from a full recovery. He indicated that unemployment is still four times higher than the pre-pandemic level. ¹

“That just tells you that the labor market has improved, but it’s a long way from maximum employment,” Powell said. ¹

Stock Market Returns

The investment markets continue their recovery from the downturn that hit in March of this year. Through September 16, the indexes have the following year-to-date returns:

S&P 500: 3.39% ²

DJIA: -2.90% ³

NASDAQ: 20.19% ⁴

While the markets have mostly recovered from their losses earlier in the year, volatility can strike at any time. That’s especially true should the COVID pandemic worsen or if the economy suffers continued damage. There also may be increasing uncertainty as the election approaches.

If you're concerned about risk, let’s talk about it. There are a wide range of strategies and tools we can implement to minimize risk and protect your retirement income . Let’s connect today and discuss your needs, goals and concerns. At Diamond Retirement Strategies, we welcome the opportunity to help you implement a strategy based on your objectives.

1 https://www.cnn.com/2020/09/16/economy/federal-reserve-september-meeting/index.html

2 https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_nHNjX8_WMNLKtQbPmoKICQ7:0,_BHtjX7uKPNqttQbohYywCQ7:0

3 https://www.google.com/search?q=INDEXDJX:.DJI&tbm=fin&stick=H4sIAAAAAAAAAONgecRozC3w8sc9YSmtSWtOXmNU4eIKzsgvd80rySypFBLjYoOyeKS4uDj0c_UNkgsry3kWsfJ6-rm4Rrh4RVjpuXh5AgAzsV5OSAAAAA#scso=_hH9jX4eyE5m1tAbHirPABA7:0

https://www.google.com/search?q=INDEXNASDAQ:.IXIC&tbm=fin&stick=H4sIAAAAAAAAAONgecRoyi3w8sc9YSmdSWtOXmNU4-IKzsgvd80rySypFJLgYoOy-KR4uLj0c_UNjCxMjYtyeBaxCnr6ubhG-DkGuzgGWul5Rng6AwDeg85uTgAAAA#scso=_139jX-TyCIy3tAbe4bnYBg7:0

Is the pandemic teaching us a lesson about retirement?

Fri, 21 Aug 2020 15:26:22 GMT

The coronavirus pandemic has touched nearly every aspect of our lives. Perhaps nothing has been impacted as much as the way we work. While millions of Americans have lost their jobs during the pandemic, those who remain employed have seen their work change drastically.

In many professions, work-from-home has become the norm; not the exception. Some people have seen their work paused during this time. Others are on a mini sabbatical until their work gets back to normal. And for those who have lost their job, this may be a frightening time as they try to navigate an uncertain job market.

In many ways, this time could be seen as a small trial run for retirement. Your schedule isn’t clearly defined. You may be spending much of your time at home. Your work responsibilities may be limited or cut significantly. There are lessons you can take from this time and apply to your retirement. Below are a few of the biggest takeaways:

Economic Update: COVID Resurgence Could Threaten Recovery

Mon, 17 Aug 2020 17:01:04 GMT

The United States set a somber record on Thursday, July 16, 2020, with more than 75,000 new COVID-19 cases. In fact, the U.S. set new single-day COVID-19 records 11 times between June 17 and July 16. Dr. Anthony Fauci predicts the country will soon top over 100,000 new cases each day. ¹

COVID-related deaths are also increasing in some states. Florida set its single day record for COVID deaths on July 16, with 156. Nine other states also set single-day death records the same week. ¹

The resurgence in coronavirus cases has led some states to enact new measures. More than half of all states now have some kind of mask mandate. California has even rolled back its reopening, closing bars, indoor dining, gyms, and more. ²

What does this mean for the economic recovery? And what does it mean for your financial future? It’s impossible to predict what will happen in the short-term, but knowing where things stand today may help you make important decisions with your strategy.

Stock Market

The stock market continues to rally in spite of the increasing COVID numbers and the return of restrictions. As of July 16, the S&P 500 is nearly back to even for the year. In fact, it’s up 43.71% since hitting a low 2237 on March 23. ³ NASDAQ set a record-high on July 9 when it reached 10,617. ⁴

The continued gains are good news for investors, especially after the sharp decline in March. However, that decline also shows us just how quickly the market can turn, especially if state governments introduce new orders that close businesses.

If you’re concerned about another potential downturn or future risk, this could be the right time to explore risk-protection strategies. For example, products like annuities allow you to participate in a portion of the market upside but also protect you against losses. A financial professional can help you determine which risk-management strategy is right for you.

Unemployment

While the number of new unemployment claims has declined for 15 consecutive weeks, unemployment numbers are still much higher than they were pre-COVID. In February, there were approximately 200,000 new unemployment claims each week. That number exploded to 6.867 million new claims in one week in late March. While new claims have declined since that point, they’re still more than double their level during the height of the Great Recession in 2009. ⁵

Stimulus

In March, the government passed the CARES Act, which, among other things, provided direct stimulus payments to many Americans. A recent study found that 74% of recipients had used all of their stimulus payments within four weeks. ⁶

As the coronavirus pandemic continues to impact Americans, Congress is considering a second round of stimulus payments. In May, the House of Representatives passed the $3 trillion HEROES Act to provide a second round of direct stimulus payments. ⁶

In an interview in mid-July, Treasury Secretary Steve Mnuchin indicated that a second round of stimulus payments was a possibility, even if it doesn’t align exactly with the HEROES Act. Senate Leader Mitch McConnell and President Trump have also recently expressed their willingness to negotiate a second stimulus package.

While stimulus payments may provide a nice boost, they’re not a replacement for long-term strategy. At Diamond Retirement Strategies, we can help you analyze your needs and goals and implement strategies to limit your risk exposure. Let’s connect soon and start the conversation.

1 https://www.nytimes.com/2020/07/17/world/coronavirus-updates.html

2 https://www.theguardian.com/us-news/2020/jul/15/california-coronavirus-shutdown-businesses-restaurants

3 https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_Ap0RX4PNDdvRtAbPobiYBQ1:0

4 https://www.cnn.com/2020/07/09/investing/stock-market-supreme-court-trump/index.html

5 https://finance.yahoo.com/news/coronavirus-jobless-claims-unemployment-week-ended-july-11-175149759.html

6 https://amp.usatoday.com/amp/112232064

Need a Virtual Retirement Checkup?

michele@drstrategies.org (Michele Diamond) — Wed, 27 May 2020 17:29:27 GMT

With the emergence of COVID-19, the old ways of doing business have been sidelined for the next few months until the world can readjust to whatever the “new normal” might be. Maybe you are FaceTiming your grandkids or maybe you have had a telemedicine appointment with your doctor. Hopefully you haven’t had to make a virtual appointment to schedule a drive-through COVID-19 test.

If you happen to be bored at home during this time and are caught up on Netflix, completed all the puzzles in the old game and toy cabinet, or even busted out the sewing machine and made face masks out of all the clothes in the donation pile, Diamond Retirement Strategies has a few suggestions regarding what to do next.

Now is the perfect time to organize the pile of financial papers stacked up in your office. You know, the pile that you say you will always sort, file and shred when you have more time? Well my friends, the time has come!

After you get organized and find the latest statements, we would love to do a retirement review with you to make sure your current income strategy still meets your goals for the future. There is nothing like a pandemic to make people stop and assess their priorities. Maybe you feel like you need to earmark more money for healthcare needs in the future. Maybe a yearly cruise isn’t so appealing any more, and you would prefer to use your funds for an RV and start doing road trips instead. Maybe you want to arrange your life so you can spend more time with your family and playing golf.

Whatever your income goals are, we can help you make a plan. And, we can do it all virtually….so you can stay safe and never leave the comfort of your own home. All you need to do is brew a cup of coffee or tea, gather your documents, get comfortable and let’s start a virtual conversation about your retirement income strategy.

We are here for you. Call us today to schedule your virtual retirement strategy planning appointment!

Michele Diamond

Diamond Retirement Strategies

480-636-7735

Licensed Insurance Professional. Respond and learn how financial products, including life insurance and annuities can be used in various planning strategies for retirement.

ARE-7374 -20086 -2020/53/141

Election Year, Coronavirus, Stock Market Turbulence … OH MY!

michele@drstrategies.org (Michele Diamond) — Wed, 27 May 2020 17:26:48 GMT

Just in case you have had your head in the sand for the last month (which may be the safest place, actually!), let’s review the trifecta of issues that are currently making 2020 a one-of-a-kind year.

We all knew 2020 was slated to be a contentious election year. No matter where you are on the political spectrum if you remember what 2016 was like, making a conscious decision to not talk politics on Facebook or at family get-togethers for the rest of the year might be a good relationship-saving move.

The wild card that we didn’t see coming was the Coronavirus. The new virus, which was detected in China at the end of 2019, has spread across the globe. Health officials and governments started out talking to the public about “containment,” but the conversation has moved to “mitigation,” as the world grapples with quarantines and vaccines.

As the Coronavirus spreads, its effects have spread through the stock market. Oil and travel stocks have been hit hard as travel has been restricted and more and more people are staying home. Concerts, sporting events, weddings, vacations and business travel have all ground to a halt.

So, what is a retiree or pre-retiree to do during trying times? We all know that when it comes to elections, pandemics and a topsy-turvy stock market, that these events WILL happen. There is no question “if” these events will happen. Warren Buffet, known for his pity comments that bring us back to the basics when the market sours: Predicting rain doesn’t count, building the ark does.

With that advice, now might be a good time to ask yourself how you can continue to build a stable financial ark for your retirement income plan. What are your future financial plans to help when the waters feel choppy and you start to get seasick?

Let DRStrategies help you in today’s uncertain world despite elections, viruses, and stock market risk. With successful strategies, where risk should never dictate your retirement income plan, let us help you build a stronger ark.

Our team of private licensed professionals would love to talk with you about a protection plan that will include your specific goals for retirement. We can build you a customized retirement income strategy that will be managed for not “if”, but when that Tsunami hits.