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Ponderings For the Week of April 24 to 31, 2017

Stocks Stage a Rebound

After two consecutive weeks of losses and the prospect of a decline for the month of April, stocks staged a rebound last week despite continuing worries both here and overseas. While larger company stocks gained a fraction of a percent on average, mid- and small-cap stocks rallied strongly with gains of over 2%, enough to push the beleaguered small cap stocks back into positive territory for the year so far.

Two European elections will be closely watched by the investment community. Sunday’s results in France will lead to a runoff between center-left candidate Emmanuel Macron and far-right candidate Marine Le Pen. This result was expected. A likely runoff victory by Macron will reassure investors that France will not leave the EU and will support the Euro. Nevertheless, for the first time in French history, no candidate from the party establishment will be in the runoff proving that dissatisfaction with the government establishment is spreading. The second election taking place in the UK in June is expected to bolster Prime Minister Theresa May’s parliamentary majority, reducing any opposition to leaving the European Union. Why, one might ask, should U.S. investors fret about upheaval in Europe? Europe is a vital trading partner with the U.S. and severe disruption in the European economy could greatly harm U.S. investment markets. 

Corporate earnings reports for the first quarter continue to shine and expectations are for more good news as earnings season peaks over the next few weeks.

 

 
  

You Might Want to Consider Completing an Ethical Will

An “ethical will” is a way for someone to share personal information to family members. Ethical wills are often written by people at turning points and transitions in their lives or as part of later life estate planning. There is no prescribed content to an ethical will, but some topics that might be considered include:
   

  • Important family traditions
  • Family or religious ceremonies that have been meaningful
  • Things that were learned from older and younger generation family members and others
  • Values that the author wishes to pass on to the next generation
  • Meaningful changes in the world that have occurred over the author’s lifetime
  • Major changes that occurred in the author’s personal circumstances
  • Important decisions that were made that made a difference
  • What the author might have done differently
  • What the author hopes people will remember about him or her
  • Feelings that the author has had that might not have been shared with others
  • What has not been accomplished that the author had hoped to accomplish
  • Hopes for the future

You may want to specify who should and should not read the ethical will and may choose to prepare different versions for different family members. The contents of an ethical will, which have no legal standing, are often shared with loved ones before death, or the writer may prefer that it be read posthumously. If you prepare an ethical will that is intended to be read after death, be sure to make family members aware of its location, perhaps as a part of a letter of instruction. Our “Lifetime Financial Organizer” includes a section with suggestions and space for completing an ethical will. Visit www.mylifetimefinancialorganizer.com.

 

Smart Money Tips

  • Teach your children to save. April 28 is national Teach Children to Save Day. Banks are promoting children’s savings accounts. Whether you use bank savings accounts or investment accounts, the sooner you can encourage youngsters in your life to get into the savings habit, the more likely they will grow up to become regular savers. If you have children or grandchildren who have earnings from full- or part-time employment and you can spare the money, give them the gift of an IRA, a wonderful best place for young adults to save. Whatever your situation, encourage younger generation family members to save. For information on ways to build a generation of savers, visit: www.teachchildrentosave.com.
     

                                                                                                                                                                                                                                                                                                                                                                                                                                                         

  • A lesson in loan repayment. One of the unpleasant byproducts of the financial crisis is the continuing need for many consumers to pay down the large debt they accumulated in the days of too-easy credit. This is called “deleveraging” and it is always a good thing to do, but it’s also tough to do. The reason it is so difficult is that most loans and loan interest have to be paid back with after-tax dollars. So, for example, in order to make a $500 credit card or car loan payment, you’ll have to earn about $750 because about one third of your gross income will be subject to federal, state, and Social Security taxes. ($750 income minus $250 taxes equals $500 available to put toward the loan)  But don’t let that unpleasant fact deter you from reducing your debt. The less debt you have in the future, the better. Incidentally, Americans are once again gorging on debt. A recent report from the Federal Reserve Board indicates that consumer debt is now equivalent to what it was in 2008, just before the financial crisis.



     

                                                                                                                

  

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