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Money Advisor Wealth Management

Money Advisor Wealth Management

Your future is looking up We keep our clients informed about the news that matters most.

News

Market Commentary

Investors will think of the last quarter of 2018 for years to come, but they won’t remember it fondly. The Economist described it like this,
 
“After a rotten October and limp November, the S&P 500 tumbled in value by 15 percent between November 30th and December 24th. Despite an astonishing bounce of 5 percent the day after Christmas, the index finished the year 6 percent below where it started…”
 
Last quarter’s volatility and the slide in share prices owed much to uncertainty about economic growth. Investors were concerned about a variety of issues, including:
 
·        The Federal Reserve making a mistake. Many in financial markets worried the Fed would raise rates too high, too quickly and stifle economic growth. Last week, the Fed put those fears to rest when its Chair, Jerome Powell, suggested the Fed was willing to stop increasing rates during 2019 if there were signs of economic weakness. Investors rejoiced and the three major U.S. indices experienced significant gains on Friday.
 
·        Weaker corporate profits. Companies were remarkably profitable during the first three quarters of 2018, in part because of the boost from tax reform. However, there were worries fourth quarter earnings would be weaker as the effects of the stimulus faded. Last week, John Butters of FactSet reported, after three quarters of 25 percent or higher earnings growth, the estimated earnings growth rate for fourth quarter 2018 is 11.4 percent.
 
·        A slowdown in global economic growth. Trade wars and tariffs clouded the outlook for global growth throughout the year. The Economist reported there were signs of economic slowdown in China, and one American technology firm attributed a sharp downturn in its profitability to weaker economic growth in China. There were also signs of economic weakness in Europe.
 
·        A slowdown in domestic economic growth. Investors have been worried that trade issues, the government shutdown, and other matters could negatively affect economic growth at home. If the government shutdown is resolved quickly, these worries may prove overblown. Last week, Taylor Telford of the Washington Post reported, “…According to interviews with several analysts: The economy is fundamentally strong, and the stock market has overreacted to concerns about a modest slowing.”
 
As anxiety rose during the fourth quarter of 2018, some investors rushed to the perceived safety of bonds. High demand pushed the yield on 10-year Treasury bonds lower. It dropped from 2.99 percent to 2.69 percent during December, according to Yahoo! Finance.
 
While increasing bond exposure may have been a prudent portfolio adjustment for investors who were taking more risk than they could bear, those who moved out of stocks on fear missed out.
 
The Standard & Poor’s 500 Index and the Dow Jones Industrial Average posted their biggest one-day point gains on record on December 26, reported Emily McCormick for Yahoo! Finance.
 
At this point, some investors feel overwhelmed and worried about their ability to reach personal financial goals. If you’re one of them, please give us a call. Sometimes, reviewing life and financial goals, and the reasoning behind portfolio choices, may be reassuring. We look forward to hearing from you.
 
Weekly Focus – Think About It
 
“The wind comes across the plains not howling but singing. It’s the difference between this wind and its big-city cousins: the full-throated wind of the plains has leeway to seek out the hidden registers of its voice. Where immigrant farmers planted windbreaks a hundred and fifty years ago, it keens in protest; where the young corn shoots up, it whispers as it passes, crossing field after field in its own time, following eastward trends but in no hurry to find open water. You can’t usually see it in paintings, but it’s an important part of the scenery.”
 
– John Darnielle, Musician and author 

Taking on Debt in Retirement

It seems as though debt and the debt load being carried by Canadians is becoming an ongoing issue discussed in our media. Recent poll numbers suggest that many Canadians are retiring with some form of debt. Carrying debt means you will have principal and interest payments to make. But the question I’m often asked, “Is all debt bad?” To which I generally reply, “No, not all debt is bad. However, it is important to understand how the debt is being managed, especially entering into or during retirement.”
 
Debt can come in many forms: mortgages, lines of credit, car loan, consumer debt. Some Canadian retirees are finding themselves faced with additional mortgage payments brought on by vacation properties. Others are fully financing post-secondary, new home purchases or a variety of other large expenses for their children and grandchildren. High interest payments and the transition into fixed retirement income, can have an adverse effect on some of your retirement plans. Debt is something Canadians have grown accustomed to living with. Your retirement, however, is a period during which you are often not accumulating capital. We want to ensure your retirement income can withstand the debt you will be carrying with you. So, if you let your debt get out of control, yes, living the retirement of your dreams can become extremely difficult, if not impossible.
 
So how do we address debt in planning for and entering into retirement? We develop a financial plan and begin evaluating how to reduce your debt to ensure your retirement goals are not sacrificed. We look at your revenue streams in retirement: are you drawing from a registered savings plan, pension or other investment vehicles. From there, we examine your cost of living and debt obligations. In reducing your debt load some options may be more transparent than others. If you own multiple properties, cars or recreational vehicles, we discuss downsizing or creating supporting revenue streams. If your children are your financial Achilles, perhaps it is necessary to guide them in embarking upon their own financial journeys. Credit card debt is readily obtainable and can have enormous interest rate implications. Prioritize paying off those credit cards with the highest interest rates and evaluate your current spending habits. Other debt restructuring ideas may be less transparent and require the services of a financial professional. We work to structure your debt to minimize interest costs, discuss payment options and help you budget your retirement savings.
 
Just as planning for your retirement does not happen overnight neither does reducing your debt load. Being in control of your financial situation and setting a course to allow you to pay down your debt, will also assist you in living out the retirement of your dreams.
 
We always enjoy getting your feedback!
 
Kevin 

Mapping out Your Retirement Goals

Have you found yourself thinking about retirement lately?
 
Your retirement is an incredibly exciting stage of your life. While it is easy to get caught up in the excitement, it is hard to conceptualize that retirement will be 52 weeks a year. When beginning to consider your retirement goals, creating a retirement map can be an invaluable tool to help guide you to a financially stress-free retirement.
 
To begin your retirement map, you must ask several questions: (1) what do you want to accomplish in retirement, (2) how much will your retirement cost, and (3) how will you pay for your retirement?
 
Everyone has a different idea of the ‘dream retirement’. Will you use your retirement to travel the world? Will you write a book or take up a new sport? Will you become a fixture on the golf course, the beach or the ski hill? Will you start a new business venture? Or perhaps you are not entirely sure. A common theme that surfaces when I ask clients what they want out of their retirement, is travel. Travel can include visiting your children 3 times a year, touring Europe or living on a beach in Maui for a month. Giving thought to your retirement beyond these short-term travel plans is important. These discussion points can allow you and your partner to discuss both your personal and joint goals. Reflecting upon what is important to you and your family can help outline the true costs associated with retirement.
 
Your map is not set in stone but rather guides the decisions you make today to meet your financial needs in retirement. At Money Advisor Wealth Management, we consider your day-to-day expenses as well as funds you require to meet your retirement goals. This inquiry can pose numerous questions such as: Will you still have children living with you and needing your financial assistance? Will you have university education to pay for your children or grandchildren? Will you be investing in a new business venture? Working through multiple options will assist in developing a realistic plan for your retirement.
 
The next step towards mapping out your retirement goals is to identify your sources of income. Paying for your retirement can take many forms. Some may retire on a full pension, some may continue to work part-time. Others may have invested in their retirement savings plan since their teenage years, others may have entered the retirement savings game later in life. Having a realistic idea of your expenses and sources of revenue can assist in creating a retirement wealth plan. We work with you to create dependable revenue streams that will lead you through the retirement of your dreams. This map integrates into your overall financial plan.
 
Retirement is an exciting journey. Ensuring you have a financial plan in place will help guide your way to a successful and fulfilling retirement.
 
We always enjoy getting your feedback!
 
Kevin 

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