Posts made in December 2019

A family legacy can have multiple aspects. It can include much more than heirlooms. It may also include guidance on what to do with the gifts that are given.

What are your “legacy” assets? Financially speaking, a legacy asset is something that may outlast you, something that might produce income or wealth for your descendants.
To help these financial legacy assets endure, an appropriate legal structure may be necessary. The goal is to have a structure that may permit reasonable management of the legacy assets – not just five years from now, but long into the future as well.

For example, imagine that 40 years from now you have 12 heirs to the company you’ve founded. Would you expect all 12 heirs to manage the company together?

Probably not. Some of those heirs may not be old enough to handle such responsibility. Others may be reluctant or ill-prepared to take on the role.

Values are also crucial legacy assets. Early on, you can communicate the importance of honesty, humility, responsibility, compassion, and self-discipline to your children and grandkids. These virtues can help young adults do the right things in life and guide their financial decisions. Your estate strategy can articulate and reinforce these values, and perhaps, link your children or grandchildren’s inheritance to the expression of these qualities.

Make sure to address the basics. Is your will up to date? How about the beneficiary designations on your retirement accounts? Creating a trust may be a smart move. But remember, a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.

Think about the legacy you are leaving. Your thoughtful actions and guidance could help your children and grandchildren enter adulthood with good values and a promising financial start.

One of the best ways to keep your data safe online is to have a strong password. The IRS shares some tips on how to create and protect your passwords:

• Your password should be a minimum of eight characters. The longer, the better.
• Your password should include a combination of letters, numbers, symbols, and special characters.
• Don’t include personal information, including names of family members or pets, identifying information about where you live, or other personal details.
• Don’t use the same password for everything.
• Substitute special characters and numbers for common letters to make your password more difficult to guess (ex: @ for a, ! for i, 8 for B, etc.).
• Be aware of scams asking for your password and never tell people your passwords.

If you find yourself forgetting your passwords, a tool like LastPass can help. This tool encrypts your passwords, so they stay safe and can be downloaded on your computer. It will remember your passwords, so you don’t have to.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[7]
[7] www.irs.gov/newsroom/strong-passwords-help-keep-tax-data-safe

The Week on Wall Street
The U.S. and China announced a limited trade agreement last week. That news lifted U.S. and foreign stocks, leading to weekly gains.

Advancing 0.91% on the week, the Nasdaq Composite outperformed the S&P 500 (up 0.73%) and Dow Jones Industrial Average (up 0.43%). The MSCI EAFE index, measuring the performance of developed markets overseas, improved 0.42%.[1][2]

Phase-One Trade Deal Reached, December Tariffs Averted
Friday, White House and Chinese officials confirmed an agreement on what has been characterized as an initial step toward a larger trade pact. As a result of this phase-one deal, new U.S. tariffs (slated to go into effect on December 15) were canceled. The 15% tariffs (imposed on $110 billion of Chinese goods in September) now fall to 7.5%.

In return, China commits to buy greater quantities of American crops, factory goods, and energy products.[3]

Fed Holds Steady on Short-Term Interest Rates
The last Federal Reserve meeting of the year brought no adjustment for the federal funds rate. The vote to leave short-term rates unchanged was unanimous.

After the meeting, Fed chair Jerome Powell told the media, “as long as incoming information about the economy remains broadly consistent with [our] outlook, the current stance of monetary policy will likely remain appropriate.”[4]

Retail Sales Disappoint
Economists, surveyed by Bloomberg, expected a retail sales gain of 0.5% for November, but according to the Department of Commerce, the advance was only 0.2%. In a bright spot for analysts who wanted to see a strong start to the holiday shopping season, sales at online retailers rose 0.8% last month. [5]

[1] www.wsj.com/market-data
[2] quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
[3] www.marketwatch.com/story/trump-announces-phase-one-china-trade-deal-and-scraps-dec-15-tariffs-2019-12-13
[4] www.bloomberg.com/news/articles/2019-12-11/fed-leaves-rates-unchanged-and-forecasts-show-no-change-in-2020
[5] www.bloomberg.com/news/articles/2019-12-13/u-s-retail-sales-miss-forecasts-for-pickup-as-restaurants-drop

Flexible spending accounts (FSAs) are savings accounts reserved for out-of-pocket health care costs. They are offered through an employee benefit plan and allow you to use pretax dollars to pay for medical costs that insurance might not cover.

FSAs can save you money because they are funded with pretax dollars, but they are “use it or lose it,” meaning that if you don’t use the funds by the end of the year, they don’t roll over into the next. There is some flexibility, and employers may extend the deadline to use funds until March 15, but participants might want to aim for the end-of-year deadline to be safe. That means, come December, you should have a plan of how to maximize your FSA funds.

Not sure how to spend your remaining FSA dollars? FSA Store has thousands of items that are eligible, including first aid items, travel essentials, pain relief items, and much more.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from TurboTax[7]

[7] turbotax.intuit.com/tax-tips/health-care/flexible-spending-accounts-a-once-a-year-tax-break/L8hwzKu7r

The Week on Wall Street
Key Wall Street benchmarks were up and down last week – or rather down and then up. A Tuesday retreat was offset by a Friday rally spurred by the Department of Labor’s November jobs report.
While the S&P 500 managed to rise 0.16% for the week, the Dow Jones Industrial Average declined 0.13%, and the Nasdaq Composite ceded 0.10%. MSCI’s EAFE benchmark for international stocks retreated 0.25%.[1][2]

Hiring Surpasses Expectations
Employers added 266,000 net new jobs last month, 79,000 more than economists surveyed by Dow Jones had projected. The main jobless rate ticked down 0.1% to 3.5%. The U-6 rate, counting both the unemployed and underemployed, also declined 0.1% to 6.9%. Wages grew 3.1% year-over-year, above the 3.0% Dow Jones estimate.

These numbers do not indicate an economy cooling off. While they were influenced by the return of striking General Motors workers to their jobs, November hiring gains were spread across several categories.[3]

Markets Might Wait Well into 2020 for a China Trade Deal
The U.S.-China trade dispute has gone on for 21 months. Wall Street would like to see a new phase-one trade agreement signed this month, but the timeline could lengthen. On Tuesday, President Trump said that he was considering the option of waiting until after the 2020 election to sign off on such a pact.

On December 15, the U.S. is slated to impose a new set of tariffs on around $160 billion of Chinese products. Tech companies are eyeing this date with concern.[4]

Final Thought
Holiday shopping is critical to the economy, accounting for about 20% of annual retail sales. This year’s calendar, however, does not favor retailers. The 2019 holiday shopping season is six days shorter than last year’s, as Thanksgiving fell on November 28. So, expect traders to keep close tabs on the pace of holiday spending, even with consumer confidence indices and stock benchmarks at high levels.[5]

[1] www.wsj.com/market-data
[2] quotes.wsj.com/index/XX/MSCI%20GLOBAL/990300/historical-prices
[3] www.cnbc.com/2019/12/06/us-nonfarm-payrolls-november-2019.html
[4] www.washingtonpost.com/us-policy/2019/12/03/trump-says-trade-deal-with-china-could-wait-until-after-election/
[5] www.jsonline.com/story/money/2019/11/26/black-friday-tv-sales-deals-best-buy-target-walmart-kohls-still-good/4254241002/

It’s the most wonderful time of the year for online shopping! Buy your holiday gifts with ease with these tips on how to protect your data online:

• Don’t enter your credit card information if you’re connected to an unsecure Wi-Fi network.

• Only shop at sites that you know and make sure they have an “https://:” URL (the “s” in the URL means that it’s secure).

• Recognize phishing emails, never click on links you don’t know, and report scams that ask for financial information to the IRS.

• Keep your computer and security software up to date.

• Use strong, long, and unique passwords. Use a combination of letters, numbers, and special characters.

• Use multifactor authentication when available. These sites, like email servers and banking websites, will require a code be sent to your phone number to be able to log in.

• Encrypt sensitive data on your computer.

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov[8]

[8] www.irs.gov/newsroom/follow-these-tips-to-protect-data-when-shopping-online

The Week on Wall Street
As November wrapped up, U.S. equity benchmarks advanced. Stocks were again aided by a sense of optimism that a preliminary U.S.-China trade deal could be near.

For the week, the Nasdaq Composite added 1.87%; the S&P 500, 1.21%; the Dow Jones Industrial Average, 1.03%. The MSCI EAFE index, which measures the performance of developed stock markets outside North America, gained 0.89%.[1][2]

Markets Wait for News of a Trade Pact
Wednesday, a senior White House official told Politico that the U.S. was “millimeters away” from a phase-one trade agreement with China, a deal that might involve the removal of certain tariffs.

Still, friction remains within the Sino-American relationship. Last week, President Trump signed two bills into law backing pro-democracy demonstrators in Hong Kong. China’s Ministry of Foreign Affairs quickly reacted, stating that American lawmakers had “sinister intentions” and adding that China would take “strong counter-measures” in return.[3][4]

The Latest on Consumer Spending and Consumer Confidence
Personal spending was up 0.3% in October, according to the Department of Commerce. This happened even with no gain in household incomes.

The Conference Board said its Consumer Confidence Index came in at 125.5 for November. Even though it has declined for four straight months, the index remains well above levels seen during the first half of the decade.[5][6]

[1] www.wsj.com/market-data

[2] quotes.wsj.com/index/XX/990300/historical-prices

[3] www.politico.com/news/2019/11/27/us-trade-deal-china-074230

[4] www.cnbc.com/2019/11/29/dow-futures-black-friday-thanksgiving-holiday.html
[5] www.morningstar.com/news/dow-jones/201911276898/us-gdp-growth-revised-up-to-21-rate-in-third-quarter-2nd-update
[6] www.briefing.com/calendars/economic/display-article?ArticleId=ER20191126100000ConsumerConfidence&FileName=conf.htm