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January 24, 2018
Jersey Benefits Advisors Investor Newsletter Winter 2018

Market Watch

As we look back at the performance of the stock market in 2017, it’s hard not to wonder aloud what can be done for an encore in 2018.  Indeed, the U.S. markets had a very strong year in 2017 as the Dow Jones Industrial Average (DJIA)* set a record of 24,837.51 on 12/28/17 and pulled back slightly to end the year at 24,719.22 for a year end gain of 25.1%.  The S&P 500* finished the year at 2,673.61, off slightly from its record close of 2,690.16 on 12/18/17, and notched a 19.4% return.  The NASDAQ* also attained a record on 12/18/17 when it closed at 6,994.76, but the index surrendered a few points to end the year at 6,903.31 and achieved a 28.2% advance, the best performance of the major indices.

This current bull market is now over 8 ¾ years old, and continues to chug along as it competes with the 10 year bull market of the 1990’s for longevity, and hopefully not folly.  You might remember that bull market ended in a dot com bubble that deflated quite spectacularly.  Whether we can avoid “irrational exuberance”, the famous utterance by former Federal Reserve chief Alan Greenspan, remains to be seen.  So far, the promise of a reduction in the corporate tax rate, reduction and simplification of the tax code in general for individuals, doubling of the standard deduction, repatriation of profits trapped overseas and the lessening of the regulatory burden on businesses has been one of the drivers of the markets. 

Now that tax reform has become law and that promise has become a reality, the effects should be felt almost immediately by individuals and corporations, as paychecks reflect the lower rates, and corporate earnings achieve a lower multiple due to higher profits expected from a lessening of the tax burden.  One knock on the new tax law has been that it is a gift to corporate America, and the lower tax rate will just help the rich get richer.  However, all of us have the opportunity to share in corporate profits through our investment portfolios, whether it be in an individual account or in a 401k, 403b, IRA or other type of retirement account. 

As companies become more profitable, their share prices improve adding value to shareholders.  If you own a retirement plan, you ARE a shareholder.  Companies also attract shareholders by returning profits to them via a dividend.  Dividends add value to an investment because the shareholder can either take the dividend as cash, or reinvest the dividend in more shares of an individual company, mutual fund or ETF held in the account.  No matter what political view you hold, a capitalist economy can help anyone who invests a portion of their hard-earned dollars in some type of retirement account build wealth over time, especially if you utilize dollar cost averaging*, don’t chase yield and stay invested during market downturns, because most investors are not able to time the market with any regularity.

I mentioned reduction of regulation and tax reform, the role of government, as one of the drivers of the markets in 2017, but the role of government in this bull market has been only one factor.  Improving fundamentals in the overall U.S. economy have also helped to drive the market higher, because the most important factor in the performance of the investments in your portfolio is the profitability and earnings of the companies in which it is invested.  Corporate profits have been stellar for most of the year, and the Christmas season will more than likely be a driver of corporate profits as 4th quarter earnings are released in January.  Gross Domestic Product growth (GDP) was revised upward to 3.2% for the 3rd quarter, and 4th quarter GDP growth will be reported on January 26th .  

The economy has had two back to back quarters of growth exceeding 3%.  Inflation and unemployment are low, and the 10 year Treasury Bill closed the year at 2.14%, still resulting in a positive slope to the yield curve, as short term rates, based on the Fed Funds Rate, ended the year between 1.25% - 1.50%.

An interesting point to consider is the fact that the U.S. markets were not the best performers in 2017.  Some developed Asian markets outperformed U.S. markets and European markets had average or above average returns.  This means we are probably experiencing a phenomenon that hasn’t happened in over 30 years, and that is a simultaneous global recovery.  It’s why we invest in the U.S. and global markets, bonds, real estate, commodities etc., because last year’s winner can lose next year.

Don’t Forget to Add to Your IRA for 2017

For those of you who would still like to make a contribution to your IRA or ROTH IRA for 2017, the deadline is April 16, 2018.  The maximum contribution limit is $5,500 and will remain the same for 2018.  Those 50 and older can add an additional $1,000 to that amount.   The maximum  contribution limit for individuals saving in a 401k, 403b or 457 plan is $18,000 for 2017, and has been increased to $18,500 for 2018, while the additional contribution limit for those 50 and older is $6,000 for 2017, and will remain the same for 2018.  SIMPLE IRA contribution limits remain $12,500 for 2017 & 2018 with a $3,000 catchup for those over 50.  SEP IRA annual contribution limits for 2017 are $54,000 and have been increased to $55,000 for 2018.

If you wish to start a plan, or make adjustments to the contributions in your retirement plan, IRA or ROTH IRA, please feel free to contact me at any time. 

Got a Raise?  Make The Most of It With These 4 Tips

Expecting a bump in your pay soon? You're not alone.

Companies, on average, expect to provide employees with an average raise of 3 percent in 2018, according to a survey by the human capital advisory firm Willis Towers Watson. If you're among the employees due for a raise, it may be tempting to imagine the myriad ways you can treat yourself with your increased salary.

But before you get carried away, stop and think about how you can make the most of the extra cash so you aren't soon left wondering how you ever lived on less.

"A raise can be much more than a bump in salary. When managed well, even a relatively modest raise can be part of a long-term strategy to build wealth," said Gerri Walsh, FINRA's Senior Vice President for Investor Education.

If you want to help maximize the impact of your raise, here are four ways to use the extra cash.

Increase Your Retirement Contributions

Consider bumping up your retirement contributions first thing, especially if you've got your credit and debt under control. Not only will this move help leave you better situated down the road, but paying yourself first doesn't even allow you to get used to the extra cash in your paycheck.

Bump Up Your Emergency Fund

Could you come up with $2,000 in an emergency?  If you've been procrastinating on establishing an emergency savings fund, your pay raise could be a good excuse to get serious about saving for the unexpected. If you have direct deposit at work, ask whether you can send an amount of money each pay period to a separate savings account.

Pay Down Your Debt

Many consumers are bedeviled by high-interest debt, including credit card debt. In fact, the average U.S. household carries $16,061 in credit card debt, according to an analysis conducted by More than half of Americans surveyed by the Federal Reserve said they carried a credit card balance at least some of the time.

A pay raise can provide a great opportunity to pay at least some of your debt before high interest APRs add hundreds or thousands of dollars to the debt load. If you need help coming up with a repayment strategy, here's a look at three options.

Re-evaluate Your Savings Goals

You don't have to use all of the raise for serious goals, such as building an emergency fund, debt-management or retirement. You can also use the pay bump as an opportunity to address your other financial goals. Would you like to buy a house, or save for a vacation?

From FINRA’s Alert Investor.

*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 and the performance of these indices does not reflect the 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 checking or savings accounts.  For more information, just call to set up an appointment.  Referrals are always welcome.  

Company Information

John H. Kaighn offers various products and services under the trade name of Jersey Benefits Advisors.

PO Box 1406

Ocean City, NJ 08270

Phone: (609) 827-0194

Fax: (856) 637-2479


John H. Kaighn is a Registered Representative & Investment Advisor Representative with and offering securities through Signator Investors, Inc. Member FINRA, SIPC, and Registered Investment Advisor.


200 Berkeley Street

Boston, MA 02116

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

Insurance Services and Third Party Administration offered through Jersey Benefits Group, Inc., a licensed Insurance Agency in the State of New Jersey.

PO Box 1406

Ocean City, NJ 08226

Phone: (609) 827-0194

Fax: (856) 637-2479


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


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*Jersey Benefits Advisors is a trade name for J/M Kaighn, Inc. a corporation registered in the State of New Jersey, and Jersey Benefits Group, Inc. is a corporation registered in the State of DE.

*John H. Kaighn is a Registered Representative and an Investment Advisor Representative of Royal Alliance Associates, Inc. Securities and investment advisory services offered through Royal Alliance Associates, Inc. member FINRA/SIPC. Royal Alliance Associates, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Royal Alliance Associates, Inc.

*Insurance services provided by Jersey Benefits Group, Inc., a Licensed Insurance Producer in the State of New Jersey.

*John Kaighn is licensed to offer securities through Royal Alliance Associates, Inc. in the states of CO, DE, FL, IL, MD, NC, NJ, NY, and PA., as well as investment advisory services in NJ. This Website should not be considered a solicitation for securities business or investment advisory services in any other state.

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