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Home > The Kaighn Report > Jersey Benefits Advisors Investor Newsletter Spring 2017
April 5, 2017
Jersey Benefits Advisors Investor Newsletter Spring 2017

Market Watch

As our bull market turned eight years old this quarter, the rabid optimism that made 2016 a very good year, and drove the indices higher in 2017, took a bit of a breather as March concluded.  As the realities of the Federal Reserve’s interest rate hike to the range of 0.75% - 1.00%, and the difficulty of converting campaign promises to law became apparent, the markets have perhaps begun to take a longer term view.  Frankly, I don’t think this is a negative.  When animal spirits prevail, and the records produced by the indices are the lead stories on the evening news, it’s time to start to worry a bit.  I don’t think we are at that point yet.  With that said, it was a very good start for the year, at least for the markets.  Meanwhile, the President has been continuing to attempt to make good on his campaign promises.  While I’m sure the Affordable Care Act will be revisited, tax reform, next and important on the agenda, must be advanced.

As for the first quarter performance, the Dow Jones Industrial Average (DJIA)* ended the quarter at 20,663.22 for a year to date increase of 4.56%.  The S&P 500* closed the quarter up 5.53% at 2,362.72 and the NASDAQ* logged the best performance with a year to date gain of 9.82% and ended the quarter at 5,911.74.

An important point to keep in mind in regard to your investments is not so much the effect political events can have on your portfolio, but rather the economic factors that matter to the companies that populate our portfolios.  Even though they are slowly rising, interest rates are still at historic lows.  Our tax code is complicated and loaded with many exemptions and deductions that benefit a myriad of special interests.  The corporate tax rate is considered high by global standards, and this is part of the reason why companies locate or at least produce outside the US.  Inflation is very tame, running under the 2% rate considered the target inflation rate by the Federal Reserve.  The third estimate of 4th quarter 2016 Gross Domestic Product (GDP) growth was revised to 2.1% and the 3rd quarter 2016 GDP growth was revised to 3.5%.  Real GDP growth for all of 2016 increased by 1.6%, which is positive, but can and should be better.  The unemployment rate for February in the entire US now stands at 4.7% as of the March 24th release from the Bureau of Labor & Statistics.

As some of the preceding statistics suggest, the economic expansion, which will turn eight years old in June, is at a point where cautious optimism is prudent.  Earnings are a key factor for growth.  First quarter reports and future guidance will be released this month.  For the markets to continue to grow, the profits of the companies which comprise the markets must grow at a rate needed to sustain the multiple on earnings investors are willing to pay.

An area where politics and economics intersect is trade.  Some people believe that trade is the reason manufacturing jobs have been reduced.  While this is partially correct, because it is cheaper to manufacture components for some products abroad and ship them back to the US for sale, the real reason for lost jobs is the creative destruction brought about by technology. Time and again, innovations have propelled businesses forward. Whether the innovation was a technological advancement, a new business model, a medical discovery or some other change, new ideas are at the heart of the equity markets.  For example, music technology over the last 40 years went from vinyl to 8 tracks to cassettes to CD’s to MP3’s.  Other industries have been similarly affected.   Fair trade and innovation will propel us forward with good trade policies.

Signator Investors, Inc. Corporate RIA & Other Information 

In the upcoming months, I will become an Investment Advisor Representative (IAR)with Signator’s Corporate Registered Investment Advisor (RIA) and will relinquish my own RIA.  This does not affect any of your accounts in any way, and requires no changes for any current clients.  However, it does offer the opportunity for me to offer an additional array of services and expanded products by taking this step. 

Jersey Benefits Advisors and Jersey Benefits Group, Inc. will still be trade names I will utilize for my investment and insurance business, but supervision and reporting to the various regulatory agencies will be provided by Signator, rather than the burden falling solely on me.

If you have any questions, would like to discuss if the RIA relationship would work for your accounts, or just want to talk, please contact me.

Key Ages to Remember as You Plan for Retirement

Planning for retirement is a process that literally takes a lifetime.  Here are a few important ages to keep in mind as you navigate this endeavor.  As of this writing, these are the current rules to keep in mind.

If you are 55 or older and have a separation of service event (you lose or leave your job) you can take a 401(k) distribution without paying the normal 10% early withdrawal penalty. The distribution is still taxable as income, but you save yourself the penalty tax.

At age 59 ½ withdrawals from any retirement account   (IRA, 401(k), 403(b), SEP, Simple, etc) are now free of the 10% penalty. They are still subject to ordinary income tax to the extent they were tax deductible at the time of the contribution. Roth contributions can be withdrawn tax free if they meet the 5 year account rule.

Age 62 is the earliest you can collect non-disability Social Security payments. Electing to collect at this age will reduce your benefit by approximately 25%. If you are still working and earning income your Social Security benefit may be exposed to additional income taxation. The Social Security Administration website:  https://www.ssa.gov/ provides more specific information and calculators.

At age 65, you will be automatically enrolled in Medicare parts A & B if you are already collecting Social Security.  If you have not yet started Social Security you will need to apply for Medicare directly.  To ensure you can collect your benefits in a timely manner it is suggested that you enroll 3 months before your 65th birthday. You can enroll at your local Social Security office, online, or by calling 800-772-1213.

Either 66 or 67 is considered Full Retirement Age and it is based on your date of birth.  This is when you can begin collecting your full Social Security retirement benefit. You can choose to delay your benefit until age 70.  If you do, your benefit will be increased by 8% for each year you delay receipt.  If you have delayed receiving your Social Security benefits your 8% annual increase no longer accrues after age 70. So, there is no reason to delay benefits beyond this age. 

At age 70 ½  you must begin Required Minimum Distributions (RMD) from your retirement accounts.  These systematic withdrawals from your retirement accounts are based on the IRS actuarial formula. The exceptions to this are 1) You may delay your 401(k) RMDs if you are still employed, and 2) you are never required to take RMDs from Roth contributions if you are the original contributor or you inherited it from your spouse. RMDs must be taken by December 31 of each year with one exception. Your first RMD may be delayed until April 1 of the year after you turn 70 ½. You are still required to take your 2nd RMD in that same tax year.

Have a Happy Easter and enjoy the warmth of spring!

Company Information:

John H. Kaighn is an Investment Advisor Representative with and offering Investment Advisory Services through Jersey Benefits Advisors.

P.O. Box 1406

Ocean City, N.J.  08226

Phone:  609 827 0194

Fax:  856 637-2479

Email:  kaighn@jerseybenefits.com

Http://www.jerseybenefits.com/

John H. Kaighn is a Registered Representative with and offering Securities through Signator Investors, Inc.  Member FINRA SIPC

197 Clarendon Street

Boston, MA 02116

800-322-7161

Member FINRA & SIPC

Signator Investors, Inc. is not affiliated with Jersey Benefits Group, Inc. or Jersey Benefits Advisors 

Third Party Administration and Insurance Services offered through: Jersey Benefits Group, Inc.

P.O. Box 1406

Ocean City, N.J.  08226

Phone:  609 827 0194

Fax:  856 637-2479

Email: kaighn@jerseybenefits.com

Http://www.jerseybenefits.com/

All opinions expressed in this newsletter are  independent of Signator Investors, Inc. and solely those of John Kaighn & Jersey Benefits Advisors.

* The S&P 500, the DJIA, the NASDAQ and others referenced are unmanaged indices that are widely used as indicators of Market Trends.  Past performance does not guarantee future results.  The performance of these indices does not reflect fees and charges associated with investing.  It is not possible to invest directly in an index.

*Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment.  Saving a portion of our pay each month is very important.  Company sponsored pension plans are one method to save and should be used for retirement.  Other systematic investment accounts, SUCH AS ROTH IRA’S, TRADITIONAL IRA’S, COVERDELL ACCOUNTS, 529 PLANS, BROKERAGE ACCOUNTS AND ANNUITIES  can also be opened, and debited directly from your checking or savings account. For more information, just call to set up an appointment. REFERRALS ARE ALWAYS WELCOME. 

John H. Kaighn 

199-20170403-362164


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