Category: Monthly Newsletters

The steady diet of headlines pouring out of the Trump administration has been unsettling for most Americans, regardless of where they sit on the political spectrum.

We know equity markets loathe heightened uncertainty. What is happening in Washington is generating an enormous amount of political uncertainty. Yes, the word “impeachment” has even been bandied about in conventional circles. It was responsible for a one-day sell-off last month that cost the Dow 373 points (St. Louis Federal Reserve).

Blame the knee-jerk reaction on allegations President Trump asked then FBI Director James Comey to end an investigation of former National Security Advisor Michael Flynn. There hadn’t been much downside action in the major indexes recently, so talk of impeachment jarred the short-term crowd.

But, political as well as international uncertainty has yet to generate economic uncertainty. Hence, and this is important, we have seen little downside in stocks. It really is about the economy.

Given the comparisons to Watergate, let’s take a high-level look at what was happening economically in the early 1970s and compare it to today.

Table 1: Then vs. Now

Source: St. Louis Federal Reserve, U.S. State Dept.

As Table 1 illustrates, the fundamentals are radically different today.

Beyond the brief synopsis I provided above, I’ll stay out of the political weeds and let you form your own opinions.  Stepping briefly into the political arena feels like I’ve stepped into a minefield! But I felt it was important to provide some context in relation to the markets.

My job is to be your financial advisor and financial confidant. That is where I focus my energy. I’d be happy to entertain any questions you may have about your portfolio, your financial plan, and how I believe various events of the day may impact your investments.

But let’s stick to your financial roadmap.

Table 2: Key Index Returns

Source: Wall Street Journal, MSCI.com, CNBC, Morningstar
MTD returns: April 28, 2017—May 31, 2017
YTD returns: December 30, 2016—May 31, 2017
*Annualized
**in US dollars

Shedding light on a confusing maze of options–financial literacy

I recently came across a definition of financial literacy in Wikipedia that I believe sums up the term well. I’ll paraphrase: “It refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.”

How do you manage money? How does one come up with financial goals and a plan to reach those financial goals? How do we make effective decisions with our financial resources?

These are easy questions that don’t command easy answers. You see, the financial arena is much more complex than it was 50 years ago. There is a downside to the proliferation of choices we have today. It adds a layer of complexity and creates confusion. Many don’t know where to begin. Many fall into paralysis by analysis.

One of my goals in my practice is to educate the investor. I know we cover various topics in our meetings, but I’ve learned that some folks feel uncomfortable about asking questions they perceive as too simple. Don’t we all?

Let me say this–there isn’t a bad question. I want you to be comfortable with what we recommend. I understand that you reach out to me for assistance with your finances, and I take that responsibility very seriously.

While the financial plans we advocate encompass basic principles, we do not take a cookie-cutter approach. Instead, we tailor our advice to your unique situation.

So, let’s review some of the assets we may recommend and briefly explain how they work.

So, let’s begin with something simple–stocks.

Investopedia defines a stock as “a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings.” If the company pays a dividend, it provides you with income.

Stocks can rise and fall in value.

Next, bonds. When you purchase a bond, you are lending an entity money, usually the government or a corporation. For your cash, you will be paid interest, usually every six months.

The yield you receive is based on the credit risk of the firm. Bonds can rise or fall in value but are typically much less volatile than stocks.

The worst-case scenario with stocks or bonds–a company goes bankrupt and you lose your entire investment.

That’s one reason why we highly recommend you diversify. You are not putting all your eggs in one basket.

Diversification doesn’t eliminate risk, but it does spread out the risk, potentially enabling you to earn a return that has historically exceeded the return on a bank savings account.

Let’s look at three other investment vehicles.

One quick way to diversify is to choose what’s called a mutual fund or an exchange-traded fund (ETF).

Simply put, a mutual fund is managed by a professional who purchases a diversified portfolio of stocks and/or bonds. There are thousands of mutual funds to choose from, and we carefully select ones that we believe are best suited for your portfolio.

More recently, ETFs have become quite popular. Many have very low expenses and allow you to instantly diversify.  Some are designed to mimic broad areas of the market, such as the S&P 500 Index. Others mimic an index that’s industry-specific, such as banking, health care, energy, or housing.

Both securities can rise or fall in value.

Let’s look at one more–the REIT, or real estate investment trust. A REIT is designed to produce income by investing in real estate. In many ways, it has characteristics that are similar to both a mutual fund and an ETF.

Like a good mutual fund, a publicly traded REIT allows one to instantly diversify among a broad portfolio of income-producing properties that would be inaccessible to the small investor. Unlike real estate, a publicly traded REIT is liquid.

Except under extraordinary circumstances, it can be quickly turned into cash. Like an ETF or mutual fund, it may rise or fall in value.

Space limits prevent a much more detailed survey of financial planning topics. Your needs may bend toward estate planning, retirement income planning, insurance, charitable giving, college savings, and other areas.  In fact, I dedicated substantial space to retirement-income planning and college savings in recent newsletters.

That said, let me reiterate. I’m just an email or phone call away if you have questions.

Bottom line

Every situation is unique, but there are fundamental financial principles that guide our recommendations.

Finally, let me repeat, there are no bad questions. What we don’t know can hurt us. And financial ignorance can be extremely costly.

Let’s talk if you have questions. That’s what I’m here for.

Assisting you in pursuit of your financial goals and shedding light on financial complexities provides our team with an enormous amount of satisfaction. Financial literacy is just one of the avenues that will help place you on the road to reaching your goals and dreams.

———————————

All investing involves risk, including the potential loss of principal. No investment strategy, including diversification, can guarantee a profit or protect against loss. In general, the bond market is volatile as prices rise when interest rates fall and vice versa. Bonds are also subject to other types of risks such as call, credit, liquidity, interest-rate, and general market risks. When redeemed, mutual fund shares may be worth more or less than the original amount invested. Given the fees and expenses associated with ETFs, there is potential that they may underperform the specific index being tracked. Indexes are unmanaged and cannot be invested in directly. An investment in a REIT involves a high degree of risk and is not suitable for all investors. All data are taken from sources believed to be reliable, but Royal Alliance makes no guarantee of their accuracy. All suggestions are general in nature and may or may not reflect your individual situation.

DANIEL F. YASHAREL, MSFS, CFP, RICP
Senior Partner
NWF Advisory Group
CA Insurance Lic. # 0678291

Master of Science in Financial Services
Certified Financial Planner™
Retirement Income Certified Professional
Chartered Advisor in Philanthropy
Accredited Estate Planner
Chartered Financial Consultant
Chartered Life Underwriter

Real integrity is doing the right thing,
knowing that nobody’s going to know whether you did it or not.

11835 W. Olympic Boulevard, Suite 1155E, Los Angeles, CA 90064
(310) 475-5854                           Fax (310) 773-9888
e-mail: yasharel@nwfadvisory.com
————————————————————

Registered Representative offering securities through of Royal Alliance Associates, Inc., a registered broker-dealer and Member FINRA/SIPC.

Investment Advisory and Financial Planning Services offered through NWF Advisory Services, Inc., a Registered Investment Advisor which is not affiliated with Royal Alliance.

Successfully managing a financial windfall

We’ve all heard the stories. If not first hand, at least in various news reports and anecdotes.

Some “lucky” person picks the winning numbers, prances before the cameras in what can only be described as a media lovefest, and lives happily ever after, free of financial worries.

OK, the first two points are correct, but the happily ever after doesn’t always materialize. In fact, in most cases, sudden money leaves the winner worse off than prior to their windfall.

Many winners, who aren’t used to managing a large sum of money, mismanage the funds and wreck their lives in the process. As it turns out, it’s a variation on the theme of the Prodigal Son. Only the names and the details change.

Of course, odds of winning life-changing cash in a lottery are incredibly low.

We are more likely to be the recipient of an inheritance or an insurance settlement. And it’s the unexpected pile of cash that may create an initial sense of euphoria and a false sense of security.

“The vast majority of people blow through [a financial windfall or inheritance] quickly,” said Jay Zagorsky, an economist and research scientist at The Ohio State University and author of a study on receiving an inheritance.

Whether large or small, it can seem like “play money.” And that is where the danger may lurk.

So, that brings us to the next question. What should you do if you happen to be the beneficiary of a financial windfall?

10 steps to creating a firewall around your newfound stash of cash

1. First, do nothing. That’s right, do nothing. The temptation may be to buy a new car, take a luxury cruise, or upgrade your living arrangements. That can begin an unwise cascade of purchases that will likely leave you feeling regret.I suggest you wait at least six months before embarking on any life-changing decisions. The time spent waiting and planning allows the “shock” of your newfound wealth to wear off.Besides, you need to take time to learn exactly what you’ve inherited. Is it all cash? Is it stocks and bonds? Have you just become the owner of a business or real estate?
2. Talk to a trusted advisor. Find someone who has your interests at heart, not his or hers.If you are expecting to receive a windfall or have already received an unexpected inflow of assets, let’s talk and see how we can incorporate it into your overall financial plan.The suggestions I’ll provide below are what I call the basics, the fundamentals. They may not apply directly to you, but they are common sense tools designed to help you make smart decisions and prevent an expected or unexpected windfall from being squandered.
3. Doing nothing also means not quitting quit your job. It may be tempting, but lost wages and the lack of social interaction from your work buddies may lead to remorse, even if you don’t especially enjoy your job. Besides, without work, you run the risk of blowing through your money much quicker than you had anticipated.
4. Reduce debt. We’ve always provided a holistic approach to financial planning. Once things have settled down and you have a better understanding of your inheritance, it may be time to pay down or pay off high-interest debt. Once eliminated, you no longer have that onerous outflow of interest payments on your loans.
5. If you don’t have an emergency fund, now is the time. Set aside reserves of at least three to six months, preferably the latter. The future can sometimes throw you an unexpected curve ball. Having reserves set aside will reduce your financial stress.
6. Additionally, you may decide to allocate additional funds toward savings and retirement. Again, every one of our clients is unique, with various goals, personal circumstances, and financial resources. What our team recommends for one person may vary significantly from what’s best for another.
7. Think about tax and estate planning. No one is sure what may or may not happen to the tax code this year or next. It’s something I touch on below. But it’s critical that we get a handle on the tax ramifications of your inheritance in order to maximize the financial benefit.
   For example, did you know that you may be required to take distributions if you inherit an IRA? What if you are already taking required mandatory distributions? You see, things can get tricky rapidly, but sound advice can quickly ease any concerns.Additionally, life changes are a great time to update your estate plan, especially if the inheritance increases the complexity of your financial situation.
8. Be cautious. Less-than-reputable salespeople and relatives may suddenly warm up to you, with the unspoken goal of separating you from your cash. That’s why a trusted advisor is critical. If you have a well-thought-out financial plan, it’s much easier to pass on potentially exploitative offers.
9. Consider charitable giving. Do you have a favorite charity? Would you like to help a niece or nephew finance their education? Now is the opportunity to explore the possibility of helping others.
10. Have some fun. There’s nothing wrong with treating yourself. As we provide counsel, we would like to leave some room for self-indulgence. Do you like to travel? Have you thought about an addition to you home, finishing your basement, remodeling your kitchen, or upgrading appliances? Maybe it’s those top-of-the-line golf clubs you’ve been eying or a new car.Or, maybe you’d like to spend money catching up on the everyday things of life you’ve been putting off. Everyone has a hot button. I know many of your goals. It would give me an immense amount of pleasure helping you achieve your dreams.

With a financial plan in place that manages your windfall, you’ll feel much more secure enjoying the benefits of your wealth without the nagging worries that you might run through your nest egg with not much to show for it.

Holding pattern and the Trump tax cut plan  

Stocks at home and overseas have experienced a run-up in prices over the last six months. After the S&P 500 Index claimed a new high on March 1 (St. Louis Federal Reserve), it has more or less held within a narrow range.

That hasn’t been the case for the tech-heavy NASDAQ Composite, which topped 6,000 for the first time last month (WSJ).

Admittedly, it’s an impressive comeback for an index that was clobbered in the post-dot-com era. But it’s a testament to the resilience of the U.S. economy and U.S. markets.

Table 1: Key Index Returns

Source: Wall Street Journal, MSCI.com, CNBC, Morningstar
MTD returns: March 31, 2017-April 28, 2017
YTD returns: December 30, 2016-April 28, 2017
*Annualized
**in US dollars

For the broader market, we’ve been in a wait-and-see mode.

For starters, there is the political angle, which has been a distraction. Republicans have yet to agree on a replacement for Obamacare. For now, it remains the law of the land.

But investors are more interested in tax reform and a significant cut in the corporate tax rate.

While a cut in the rate corporations pay could conceivably boost the incentive for firms to invest and expand, from the standpoint of a simple math equation, a lower tax rate translates into higher after-tax corporate profits.

And it’s rising profits that fuel stocks longer term.

Late last month, Team Trump unveiled its blueprint for tax simplification and tax cuts. And I’ve already received questions about its perceived impact.

Using data from the official White House website, Trump would like to:

• Take the seven tax brackets we have today and reduce them to three: 10%, 25%, and 35%. But no mention of income thresholds.
• Double the standard deduction for married people to $24,000.
• Provide aid for child and dependent care expenses.
• Repeal the AMT–the alternative minimum tax.
• Repeal the Medicare surtax related to Obamacare.
• Repeal the inheritance tax, the so-called “death tax.”
• Retain deductions for mortgage interest, charitable giving, and retirement; all others would be repealed, including state and local taxes and property taxes.
• Reduce the corporate tax rate from 35% to 15%.

Let me just say this: Trump’s proposal is simply a framework that he hopes will set the tone for the upcoming debate. Much more work must be done before details emerge.

If or when tax reform becomes a reality, we can make any necessary adjustments to your financial plan, capitalizing on positive changes or minimizing any provisions that may not be advantageous.

Until then, we are just speculating.

That said, I understand you may have concerns. If so, never feel as if you can’t pick up the phone and call me. I would love to hear from you and address any questions you may have.

As I’ve said repeatedly in these monthly newsletters and will say again, I am honored and humbled that you have entrusted me with the duty of serving as your financial advisor. It is a privilege that I don’t take lightly.

All investing involves risk and no strategy can guarantee success. All data are taken from sources believed to be reliable, but Royal Alliance makes no guarantee of their accuracy. All suggestions are general in nature and may or may not reflect your individual situation.

———————————

DANIEL F. YASHAREL, MSFS, CFP, RICP
Senior Partner NWF Advisory Group
CA Insurance Lic. # 0678291

Master of Science in Financial Services
Certified Financial Planner™
Retirement Income Certified Professional
Chartered Advisor in Philanthropy
Accredited Estate Planner
Chartered Financial Consultant
Chartered Life Underwriter

Real integrity is doing the right thing,
knowing that nobody’s going to know whether you did it or not.

11835 W. Olympic Boulevard, Suite 1155E, Los Angeles, CA 90064

(310) 475-5854                           Fax (310) 773-9888

e-mail: yasharel@nwfadvisory.com
————————————————————

Registered Representative offering securities through of Royal Alliance Associates, Inc., a registered broker-dealer and Member FINRA/SIPC.

Investment Advisory and Financial Planning Services offered through NWF Advisory Services, Inc., a Registered Investment Advisor which is not affiliated with Royal Alliance.

The death of repeal and replace, the Trump agenda, and stocks

There was no shortage of angst in the investment community that a Donald Trump victory in last year’s election would send shares down sharply, at least in the immediate aftermath of a Trump win.

In reality, just the opposite happened, with stocks surging in the wake of his surprise victory.

The pre-election-day conventional wisdom didn’t pan out.

Instead, investors quickly warmed to the idea that a Republican President and a Republican Congress would quickly enact a pro-business agenda that would fuel economic growth, and by extension, corporate profit growth.

It was an ambitious agenda that included a steep cut in corporate taxes, individual tax cuts, and tax reform, regulatory reform, and new outlays for infrastructure and national defense.

Sure, Republicans have never been fond of boosting domestic spending, but tax cuts and regulatory relief have always been a staple in the conservative agenda. Even then, Trump could strike a deal with Democrats to boost much-needed spending on roads, bridges, and airports.

Of course, the Affordable Care Act, aka Obamacare, was dead, right? Republicans haven’t been shy about trying to repeal President Obama’s signature accomplishment ever since they obtained majorities in the House and Senate.

Well, proposing policy changes while still on the sidelines is one thing. Enacting those changes is another.

Much like a UFC fighting match, things got ugly fast, at least from the vantage point of the Republican leadership and President Trump.

Let me briefly stop here and emphasize that I am not taking a stance on Obamacare, nor am I arguing that the House Republican plan to repeal and replace was the right prescription for what ails the current system.

Instead–and this is critical–I want to view what happened on Capitol Hill through the eyes of a non-partisan investor who is invested in a diversified portfolio, one that includes a stake in the global economy and the major sectors of the U.S. economy.

Stocks and a political brick wall

If Republicans can’t enact their agenda, won’t that quash the so-called Trump rally? Won’t shares take a beating? I’ve seen a fair number of headlines that suggest such a scenario, so let’s address it.

I believe the stock market reaction to the failed repeal and replace effort sheds some light as to how the market may react to the potential gridlock over tax reform.

Let me explain.

The failure of the Republican health care plan has graphically highlighted the deep divisions within the Republican party. No longer do investors expect corporate and individual tax reform to sail through Congress–a stark contrast to market sentiment late last year.

So, what if tax reform goes the way of repeal and replace? Will stocks take a beating? Unlike the mixed reaction to health care reform, investors have been salivating over the prospect of a cut in the corporate tax rates.

There was little fallout in the market from the failure of Republican health care, with most major indexes rising in the week following the decision to shelve the bill (WSJ).

While a cut in corporate taxes might be considered the “crown jewel” for the market, what investors want is respectable economic growth that produces respectable corporate profit growth.

Put another way, if it doesn’t materially impact the U.S. economy and the economic outlook, investors have historically turned their focus back to the fundamentals.

Currently, Thomson Reuters estimates that Q1 S&P 500 profits will rise a strong 10.2% (estimate as of March 31), the best year-over-year advance in over two years. And estimates for the remainder of the year are promising.

There will be winners and losers among the politicos on Capitol Hill. Some of you will join in those celebrations, while others will seek solace. Ultimately, investors who maintain a disciplined approach and avoid being whipsawed by shifting bullish/bearish sentiment stand the best chance of reaching their financial goals.

If there are any additional questions or concerns you may have, feel free to email or call me. That’s what I’m here for and I’d be happy to offer additional insights.

Table 1: Key Index Returns

Source: Wall Street Journal, MSCI.com, CNBC, Morningstar

MTD returns: February 28, 2017—March 31, 2017

YTD returns: December 30, 2016—March 31, 2017

*Annualized

**in US dollars

Surging consumer confidence and the economy

Surveys of consumer and business confidence have surged since the election, including the Conference Board’s survey and the NFIB’s survey of small business sentiment.

A stirring of the “animal spirits” is seemingly a prerequisite for economic activity. Without rising optimism, consumers and businesses are less likely to spend and boost economic growth.

At the March meeting of the Federal Reserve, central bankers raised the fed funds rate by 0.25% to a range of 0.75%-1.00%, and Fed Chief Janet Yellen took a cautiously optimistic stance on the economy.

However, in response to a question at her quarterly press conference, she noted, “I wouldn’t say at this point that I have seen hard evidence of any change in spending decisions based on expectations about the future.

“I think it’s fair to say that many of my colleagues and I note a much more optimistic frame of mind among many, many businesses in recent months. But, I’d say, most of the business people that we’ve talked to also have a wait-and-see attitude and are very hopeful that they will be able to expand investment.…I’m not seeing that at this point (increased spending), but the shift in sentiment is obvious and notable.”

In other words, the good cheer being reflected in confidence surveys, including the highest reading in almost 17 years from the Conference Board’s Consumer Confidence Index, has yet to materially translate into faster growth.

One vivid example–the widely followed GDPNow model from the Atlanta Fed suggests Q1 GDP is set to rise a scant 0.9% on an annualized basis.

That may change between the March 31 reading and the release of the GDP report at month’s end, but it’s not a ringing endorsement of economic activity.

Bottom line

For the long-term investor, it all revolves around economic activity and earnings growth. I recognize I’ve hammered this theme home before. And I suspect I’ll bring it up in future communiques, too.

But my sincere desire is to see you reach the goals we’ve talked about in our many conversations. Getting sidetracked by the story of the month will only serve to delay the achievement of these goals.

Once again, let me emphasize that it is my job to assist you! If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call.

As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.

­­­­­­­­­­All investing involves risk and no strategy can guarantee success. All data are taken from sources believed to be reliable, but Royal Alliance makes no guarantee of their accuracy. All suggestions are general in nature and may or may not reflect your individual situation.

February 2017

Income in our golden years

As adults, we know the importance of saving for retirement. It’s really easy. Just set up an automatic withdrawal from each month’s paycheck and direct it into a retirement account. What becomes trickier is the amount we should be saving and how we should best invest it.

But what happens as we enter retirement? We’ve been saving money our entire lives. In theory, we know what’s needed–simply rely on savings, Social Security, and if we have one, a pension.

Put another way, we are in a transition period that moves us away from retirement planning to retirement income planning.

Over the years, I’ve had many clients and colleagues reach out to me as they recognize that the seemingly simple concept of relying on savings really isn’t so simple.

At this juncture, I could stuff this newsletter with facts and information, overwhelming many of you.

Instead, I want to provide a high-level overview of two key components of retirement income planning.

But let me emphasize–I would be delighted to answer any questions you may have. I am simply an email or phone call away.

Two key aspects

A survey a couple of years ago by the American Institute of CPAs revealed that two prime retirement income planning concerns are (1) running out of money and (2) how to more efficiently and effectively tap into assets.

That shouldn’t be a surprise. “How much money do I have to live on each month?” is a common question. And, “Which accounts and in what amounts should I pull funds from?” comes up often.

Let’s start with the first question. Sources of income during retirement may include Social Security, assets, earnings from part-time work, earnings from an annuity, and a pension.

Social Security, a pension, and the annuity are reasonably stable. For most folks, however, it’s not enough to live on, and a lifetime of savings plays a key role in filling the gap.

Some of you are in a position to live off interest and dividends, only withdrawing principal for special needs. Many, however, must rely on carefully meting out and using much of their lifetime savings.

One approach is to employ what’s called a “sustainable withdrawal rate.” One common method is called the 4% rule, which some of you may have heard of.

Simply stated:  Withdraw 4% each year from your savings, an amount you may decide to keep constant or increase to keep pace with inflation.

This was once a helpful rule of thumb, but low interest rates have made it less than ideal for today’s retirees.

Let’s look at another scenario. We can always increase the annual withdrawal rate to 5% or more; however, if we raise it too high, there is the risk of running low or running out of savings.

Instead, you should consider a withdrawal rate based on your time horizon, asset allocation, and confidence level.

Questions we can consider include:

1. How many years do you want to plan for?
2. What asset mix between stocks and bonds are you comfortable with?
3. What level of confidence do you want to have that your money will last?

A lower withdrawal rate will increase the odds the portfolio will last through your retirement years– that’s intuitive. But it also means less discretionary income.

This dilemma also illustrates the need to keep an eye on capital appreciation, especially in today’s low-rate environment. It’s why I’m likely to recommend that your portfolio includes a mix of stocks.

Of course, flexibility and ongoing monitoring are critical. This isn’t a “set and forget” portfolio. Adjustments can be made based on your personal situation. So, it’s important we monitor and modify as necessary.

Let’s move to the next question–withdrawal order. Which accounts should you tap first if your goal is to maximize spending during your lifetime?

1. Let’s start with the required minimum distribution from tax-deferred accounts such as IRAs. At 70 ½ years old, the IRS requires that you take a minimum distribution each year. Miss it and you’ll pay a big penalty
2. Taxable interest, dividends, and capital gains distributions may be the next best source of income.

If additional funds are needed, your anticipated future tax bracket comes into play. Let me explain.

If we expect a higher marginal tax bracket in the future, withdrawing from the traditional IRA today may be the most advantageous choice. But be careful the distribution doesn’t push you into a higher tax bracket in the year you take it.

If you anticipate a lower tax bracket down the road, a Roth IRA may be the best option for today’s income needs. If cash is still needed or desired, then look to a traditional IRA.

However, there is one big advantage to leaving the Roth alone. You continue to take advantage of the tax-free umbrella the Roth provides. Or, you can hold on to the Roth for unexpected expenses.

Moreover, the Roth can be used as an estate planning vehicle because heirs may be able to sidestep federal taxes when withdrawing from it.

These are just a couple of ideas designed to provide you with the proper framework as you enter or gear up for retirement. It is a broad overview that’s designed to shed light on a situation that’s unfamiliar to many retirees.

Each situation is unique, which means there are many other aspects of retirement income planning that could be useful for your specific situation.

My door is always open

As I have stressed, I’m always happy to answer any questions or provide a more comprehensive review tailored to your needs. And as always, when it comes to tax matters, consult with your tax advisor.

Table 1: Key Index Returns

Source: Wall Street Journal, MSCI.com, Morningstar
MTD returns: Dec. 30, 2016—Jan. 31, 2017
YTD returns: Dec. 30, 2016—Jan. 31, 2017
*Annualized
**in US dollars

Trumped up

A recurring theme you’ve heard from me is that stocks take their longer-term cues from what’s happening to corporate profits and expectations of corporate profits, how the economy is expected to perform (which support profits), and what’s happening to interest rates.

But shorter term, any number of events or issues can creep on to the horizon and create distractions. Recall when problems in Greece and Europe bubbled to the surface. It’s just one example.

Like an 800-pound gorilla, the dominant theme that impacted markets last month and since the election has been the impending Presidency of Donald Trump.

Before I go on, let me say that while the political discourse has been unusually bitter, I really believe that our differences as Americans are dwarfed by what unifies us.

That said, I recognize the obvious–Donald Trump is a controversial figure that elicits a myriad of opinions from Americans.

Injecting politics into any commentary has risks. We all have different viewpoints and filters and what’s said can be innocently misinterpreted. But I feel it would be a disservice to you to avoid any mention of Trump in this month’s letter.

My goal is not to praise or criticize Trump’s policies, only to view them through the narrow prism of the market, whether favorable or unfavorable. So let’s dig in.

Following his win, expectations of corporate and individual tax reform were among several policy prescriptions that fueled gains.

Moreover, regulatory reform and higher defense spending are expected to receive a warm reception from a sympathetic Congress. While Republicans have historically turned a cold shoulder to higher domestic spending, investors are still betting on some type of increase in infrastructure outlays.

Yet, we also have an administration that has railed against globalism and has shunned large, multilateral trade deals.

Markets like the former positions; they cast a wary eye on the latter, fearing the prospect of a damaging trade war.

However, early optimism has turned to caution. Few things move quickly through the halls of Congress. Competing interests seem set to slow down corporate tax reform. And Trump, who ran as a very unconventional candidate, has yet to shed his unorthodox ways.

I recognize his style appeals to some folks, but his more controversial initiatives and unorthodox ways have created some uneasiness among investors. In addition, there are concerns his pro-growth initiatives that fueled gains late last year could get bogged down in Congress.

I suspect we’ll eventually see tax reform. It’s a key policy initiative for the new President. Still, patience will be needed.

Elsewhere, themes that have supported shares during the long-running bull market remain in place. Economic growth has yet to abate and there are few signs from leading indicators that it will stall. Plus, corporate profits are rising (Thomson Reuters). And for now, the Fed maintains that any series of rate hikes are expected to occur gradually.

I hope you’ve found this review to be educational.

Let me emphasize again that it is my job to assist you! If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call.

As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.

All investing involves risk and no strategy can guarantee success. All data are taken from sources believed to be reliable, but Royal Alliance makes no guarantee of their accuracy. All suggestions are general in nature and may or may not reflect your individual situation.

———————————

DANIEL F. YASHAREL, MSFS, CFP, RICP
Senior Partner NWF Advisory Group
CA Insurance Lic. # 0678291

Master of Science in Financial Services
Certified Financial Planner™
Retirement Income Certified Professional
Chartered Advisor in Philanthropy
Accredited Estate Planner
Chartered Financial Consultant
Chartered Life Underwriter

Real integrity is doing the right thing,
knowing that nobody’s going to know whether you did it or not.

11835 W. Olympic Boulevard, Suite 1155E, Los Angeles, CA 90064

(310) 475-5854                           Fax (310) 773-9888

e-mail: yasharel@nwfadvisory.com
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Registered Representative offering securities through of Royal Alliance Associates, Inc., a registered broker-dealer and Member FINRA/SIPC.

Investment Advisory and Financial Planning Services offered through NWF Advisory Services, Inc., a Registered Investment Advisor which is not affiliated with Royal Alliance.