Month: January 2017

A New Year means a chance to make some new resolutions.

But this year, in addition to the usual goals we all tend to set (like going to the gym, spending more time with family, etc.), we suggest doing something a little different:

Resolve to actually start preparing for retirement.

Every January, we meet people who intend to retire sometime within the next few years … but who have not even started the process of preparing for retirement. So whether you’re a year away from retirement or ten, our advice is simple: make 2017 the year you start getting things done.

Over the next few months, we’re going to share a few practical retirement-related resolutions you can set. They’re all very simple, and apply to pretty much everyone.

So without further ado, here is:

Resolution #1:

Get to know your 401(k)

A 401(k) is one of the most common ways to save for retirement, but many pre-retirees know very little about them other than whether they have one. But because your 401(k) is such a big part of saving for retirement, it’s critical that you:

• Take advantage of all it has to offer.
• Understand exactly what types of investments are in your 401(k), and if they’re right for you.
  Here are a few questions to ask regarding your 401(k):

1. Look again at the menu of investment options in your 401(k). Have you made your selections purposefully, or did you just accept whatever the plan provider chose for you?
2. Many 401(k) plans allow you to invest at different levels of risk. Are you investing aggressively, moderately, or conservatively? Do you understand the difference? Do you know which is right for you?
3. Many 401(k)s are invested in one or more investment funds. Each of these funds contains a prospectus, which is a document that describes how the fund works, including its objectives, strategy, past performance, and expenses. Have you read your prospectus? Do you understand how the funds in your 401(k) are supposed to work? Do their objectives match their own?
4. What will you do with your 401(k) once you’re retired? You have three basic options: leave the money where it is, withdraw it, or roll it over to an IRA or Roth IRA. Do you know which option is best for you?

A 401(k) is an absolutely indispensable retirement saving tool. If you have one, you owe it to yourself to learn more about how it works, how it’s performing, and whether the investments inside are right for you. So as you set your New Year’s Resolutions, put “Getting to know your 401(k)” high up on the list.

Of course, as you search for answers to the questions above, don’t forget that our team is here to help. Please feel free to give us a call at Minich MacGregor if you ever have any questions about your 401(k) or retirement in general.

In the meantime, have a happy New Year!

The Inauguration Oath and Address

January is a time of new beginnings, so it seems fitting that the Inauguration of the president of the United States is held in this month. Here are some interesting historical facts about this important day:

George Washington’s Inauguration Day ceremony was held on the balcony of New York City’s Federal Hall on April 30, 1789. President Washington, wearing a velvet suit, set a precedent for future inaugurations as he kissed the Bible used to swear him in. (The tradition did not stick however, and normally the president places his left hand on the bible.) Fireworks were bought by many citizens and lit up the sky to celebrate the first inauguration.

John Adams was wearing a modest grey broadcloth suit, without any showy buttons or buckles as he was sworn into office on March 4, 1797. Adams told his wife, Abigail, that receiving the oath from the Chief Justice of the Supreme Court, Oliver Ellsworth, was “the most affecting and overpowering scene I ever acted in.”

Until the ratification of the 20th Amendment, Inauguration Day was usually held on March 4th. The date was then switched to January 20th, except when that date falls on a Sunday. If it does fall on a Sunday, the president is still sworn in during a private ceremony on Sunday, before taking a public oath the next day.

Thomas Jefferson wore a long coat in a striking shade of blue at his inauguration in 1801. He was the first president to take the oath in the new capital city Washington, D.C.

William Henry Harrison’s inauguration in 1841 proved fatal. Harrison gave the inauguration address outdoors during a snowstorm without wearing a hat, coat, or gloves! His speech is on record as the longest inaugural speech going on for almost 2 hours. After that, he spent a long night at various inauguration balls. All this lead to a deadly case of pneumonia, and President Harrison passed away a month later.

The Army had to use flame throwers to clear the snow on Pennsylvania Avenue on January 20, 1961 for the inaugural of John F. Kennedy! President Kennedy was the last president to wear a stovepipe hat to the inauguration.

The first use of a bullet-proof, closed limousine for the president in the inauguration was on January 20, 1965 for Lyndon B. Johnson.

On March 4, 1861, Abraham Lincoln rested one hand upon the bible while taking his oath to become the 16th president of the United States. In 2009 and 2013, President Obama requested to be sworn into office using the same Lincoln Bible.

Technological Advances

Technological advances have definitely changed the nature of Inauguration Day which can now include the entire public. The first inaugural to be covered by telegraph was on March 4, 1845. The first photographed inauguration was at Buchanan’s inauguration in 1857, but the first inauguration to be recorded by a motion picture camera didn’t come until three decades later.

Although all of the inauguration speeches have noteworthy statements, President Ulysses S. Grant’s words on March 4, 1869 are quite interesting: “… I do not share in the apprehension held by many as to the danger of governments becoming weakened and destroyed by reason of

their extension of territory. Commerce, education, and rapid transit of thought and matter by telegraph and steam have changed all this.” Can you imagine what he would think of our “rapid transit of thought” now available with our modern devices that has taken the place of telegraph?

The first time telephones were installed on Capitol grounds for the inaugural was on March 4, 1905 when Theodore Roosevelt was being sworn in. The first use of loudspeakers for an inauguration was on March 4, 1921 for President Warren G. Harding. The first radio broadcast was in 1925 at Calvin Coolidge’s inauguration.

The television age really changed things—Harry S Truman’s inauguration address was the first to appear on TV in 1949 with the first color broadcast in 1961 for John F. Kennedy’s inauguration. January 20, 1981 for the inauguration of Ronald Reagan marked the first time closed-caption television broadcasting for the hearing-impaired was available. Bill Clinton’s second inauguration in 1997 marked the first time where it was streamed live over the internet! And at President Barack Obama’s second inauguration in 2013, there was an Inauguration Ceremony app for the iPhone.

Inauguration Parade

The first inauguration parade was held at Thomas Jefferson’s second inauguration in 1805 and was actually a spontaneous parade as Jefferson walked from his boardinghouse to the Capitol building. And the first official parade was held in 1809 at James Madison’s inauguration. He was marched to the Capital by a cavalry troop from Georgetown. Every four years we now enjoy this parade as a highlight of Inauguration Day.

African Americans participated for the first time in the parade at Abraham Lincoln’s second inauguration in 1865. And in 1917, at the beginning of Woodrow Wilson’s second term, women joined the celebration.

On March 4, 1921, Warren G. Harding became the first president to ride to and from his inaugural in an automobile (no more carriages)!

Jimmy Carter, the 39th President of the United States, became the first president to walk with his family from the Capitol to the White House in the post-ceremony parade on January 20, 1977. It was also the first time provisions were made for the handicapped to watch the parade.

The Inaugural Ball

The tradition of the Inaugural Ball began with the inauguration of James Madison. From then on the Inaugural Ball was a very anticipated highlight of Washington society!

Ulysses S. Grant’s Inaugural Ball in 1873 was held on a freezing cold night and the temporary structure had no heat or insulation. This led to the event being a disaster. Guests were dancing in their overcoats and hats! The food was cold and they also ran out of coffee and hot chocolate. The decorative caged canaries that were brought in for the party ended up freezing to death.

It was in 1921 when President-elect Warren G. Harding requested that the inaugural committee do away with the elaborate ball and the parade. He wanted to set an example of thrift and simplicity. This led to a huge private party, and then for the next few elections they became charity balls.

President Harry Truman revived the official Inauguration Ball again in 1949! And there have been inauguration balls ever since.

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This January as we watch the Inauguration of the 45th President of the United States, remember that you will be viewing history in the making. There may well be other firsts that take place on this day, so keep your eyes open!

Sources
The History of Inauguration Day. http://historynewsnetwork.org/article/150207 The American Presidency Project. Ulysses S. Grant Inaugural Address. http://www.presidency.ucsb.edu/ws/?pid=25821
Inaugural Ceremonies. http://www.inaugural.senate.gov/days-events/inaugural-ball

2016 The Year in Review

Every January, it’s customary to take a look back at the year that was. What were the highlights? What were the “lowlights”? What got us to where we are today? What were the events we’ll always remember?

Most importantly, what did we learn?

To answer that, let’s briefly recap some of the most notable events of 2016. Some have to do with politics and some with the markets. We’ll even throw a little “sports talk” in. Then see if you can spot a common theme.

Early Market Volatility

Right off the bat, there were signs 2016 would be an interesting year when the Dow® got off to its worst start since 1991.1 January saw the Dow, S&P 500®, Chinese stock market, and oil prices all tumble dramatically. Analysts started talking about how 2016 would probably be a nasty year for stocks, and some even predicted it to be the beginning of a bear market. Remember that last sentence, because we’re going to come back to it in a minute.

Brexit

The markets endured a topsy-turvy month or two, but by the middle of March, they had recovered to the point that returns were positive for the year, defying many analysts’ expectations. The next few months were relatively unremarkable until summer rolled around and the world was confronted by a new word to learn: Brexit.

Here’s a quick synopsis: on Thursday, June 23, the United Kingdom held a referendum over whether to leave the European Union. In the lead up, various polls indicated a close contest, but with a slight edge to the side voting to remain in the EU. Most poll watchers expected that “remain” would indeed be the ultimate outcome. In the end, over 33 million people went to the polls, and when the dust cleared, the result took almost everyone by surprise: the UK had voted to leave.

A big change in the status quo almost always leads to economic uncertainty, and Brexit has caused a lot of uncertainty. In fact, the EU and the UK are both still trying to answer questions about how the split will occur, how much of a relationship the two entities will still have, and what this will do to their respective economies.

As you might expect, that uncertainty created angst in the global markets as well. The Dow, for example, slid over 600 points in light of the news.2 Again, it looked as if investors might have to weather a rough second half of the year.

A few weeks later, the Dow achieved its first record close since May of 2015.3

U.S. Elections

On this side of the pond, we experienced our own political surprise when Donald Trump became the 45th president of the United States.

As with Brexit, the news came as a shock to most pollsters and political analysts, who had Hillary Clinton as the favorite going into the election. Nevertheless, Trump won the Electoral College handily.

Since then, the markets have gone on a tear. Expectations that a Trump administration—and a Republican Congress—will lead to higher interest rates, lower taxes, and fewer regulations have driven a tremendous climb in all four of the major U.S. stock indexes. The Dow recently hit 19,000 for the first time, and as of this writing, is closing in on 20,000.

A far cry from when analysts warned of a possible bear market in 2016.

Sports

Let’s shift gears for a moment.

While it didn’t get much coverage over here, sporting history was made in May when Leicester City, a relatively small soccer club in England, won the Premier League championship for the first time in their 132-year history. It was a stunning accomplishment—and one nobody could have predicted.

Here in the U.S., we saw our own history made a month later when the Cleveland Cavaliers defied expectations by winning the NBA championship. It was the team’s first ever title, and the first major trophy won by a Cleveland-based team since 1964. The Cavs were also the first team to come back from a 3-1 deficit.

As exciting as that series was, it pales in comparison to what the Chicago Cubs did a few months later. Not only did they come back from their own 3-1 deficit in the MLB World Series, they also won their first championship in over a century.

So what can we learn from all this?

Have you spotted the common theme yet? If not, here it is: all of these events went contrary to most expectations. In 2016, the unexpected kept coming true.

Many analysts thought 2016 would be a bad year for the markets. We saw the opposite. Many analysts thought Brexit would never happen. It did. Many analysts thought Donald Trump would lose. He won. Even in sports, most predicted Golden State to win the NBA finals. Most figured the Cubs would fail to overcome a 3-1 deficit.

You get the picture.

The reason we point all this out isn’t to criticize the various pollsters, pundits, and prognosticators who got these events wrong. In most cases, they had good reasons for thinking the way they did. They used history, statistics, and demographics to shape their expectations. They gave educated, well-researched opinions.

And yet, they were still wrong.
So what can we learn from this? Two things:

1. Expect the unexpected. Don’t assume that what seems most likely to happen is guaranteed to happen.

2. For investors, planning is better than predicting.

You’ve probably heard us say both these things before, but 2016 proved them. As financial advisors, we spend a lot of our time researching the markets. Our job is not to predict what’s going to happen, but to help our clients plan for what could happen. Because while certain things may seem more probable, we’ve just been shown how often the likely gives way to the unlikely. That’s why your plan should take even remote possibilities into account. It’s why we spend so much time on risk management. It’s why we buy life insurance.

So as a New Year starts, always remember that our team is here to help you plan your future. We’re here to help you create a plan for your financial goals. We’re here to help you plan for the unexpected.

On behalf of everyone here at Minich MacGregor, have a happy New Year! Please let us know if there’s ever anything we can do for you.

Sources:
1 Matt Egan, “Dow has worst four-day start to a year on record,” CNN Money, January 7, 2016.

http://money.cnn.com/2016/01/07/investing/stocks-markets-dow-china/index.html?iid=hp-stack-dom

2 Jethro Mullen, Ivana Kottasova, Patrick Gillespie, “Dow plunges over 600 points as UK earthquake crushes global markets,” CNN Money, June 24, 2016. http://money.cnn.com/2016/06/23/investing/eu-referendum-markets/index.html?iid=EL

3 “2016 The Year in Review,” The Wall Street Journal, December 2016. http://www.wsj.com/graphics/year-in-review-2016/