Apprise Wealth Management’s Selected Readings for the Week of July 5, 2020

Volunteer Sign with Hands Raised and How Volunteering Can Improve Health

I hope everyone is staying safe and healthy.

Last weekend was the most unusual 4th of July I can recall. Other than the extra day off, it didn’t seem like a holiday weekend.

This week’s articles include a reminder that you may need to save more than the amount your company matches in your retirement plan. You will also find some great investing advice parents can give their teenagers. I have discussed this with our two teenage sons recently, too. Both liked the idea.

The market’s strong rebound from its late-March lows remains surprising, especially given the pandemic’s economic impact. Fed support, rock-bottom interest rates, and stronger economic data have helped. No doubt, investors are looking past this year’s earnings weakness in hopes of an upturn in 2021.

Simultaneously, the jump in daily cases has once again increased volatility, but it has yet to knock the bulls off course.

Some folks are itching to get back to normal. Others remain on guard and are taking a more cautious approach. It may take time for some businesses to fully recover. Some never will.

Either way, many investors are betting that an economic bottom is in sight.

Ultimately, the virus’ path will play the biggest role in determining how the economy’s recovery unfolds.

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Here are the links to this week’s articles as well as a brief description of each:

1.   Just Getting the Company Match May Not Be Enough for Retirement. If your company matches at least some of your retirement plan savings, you should do whatever you can to earn the company match. Say your company matches 50% of your contributions up to 6% of your earnings. Will saving that amount every year, leave you with enough for a comfortable retirement? Probably not. Saving more increases your chance of living the life you desire in retirement.

2.   Regular Volunteering Maintains the Health of Older Adults. Volunteering can do more than improve our mental outlook. It can also benefit our physical health. According to research cited in this article, volunteering for only two hours a week reduced the risk of death in older adults.

3.   What’s the Best Investing Advice Parents Can Give Teenagers? Do your teens have a job? If they do, have them open a Roth IRA. It can show them the true value of compounding. Assume your teen earns $4,000 this year. Her tax bill will be low. Have her put $2,000 of those earnings in a Roth IRA. If she has 50 years until retirement and earns an average return of 5% a year, it will be worth nearly $23,000 when she retires. If it grows at a 7% annualized rate, she will have almost $59,000 in 50 years. She won’t pay any taxes on the earnings. She also won’t pay any taxes when she withdraws the money. I’ve recently had this conversation with my two teenage sons. Both of them like the idea. If you can, try and add to your child’s contribution. Then the contributions will grow even more. Remember that annual contributions can’t exceed your child’s earnings (or the amount allowed by the IRS).

4.   Goldman Sachs Says a National Mask Mandate Could Slash Infections and Save Economy From a 5% Hit. Wearing a mask can do more than reduce the daily growth rate of new confirmed cases of Covid-19. According to Goldman Sachs’ estimates, it could also save the U.S. economy from a 5% reduction in GDP. Why? Wearing a mask can reduce the need for lockdowns as it reduces the number of coronavirus infections. Fewer lockdowns mean more businesses can remain open.

5.   6 Bad Moves That’ll Haunt Your Client’s Retirement. Some things seem like a good idea when we do them. But if we look at the big picture, we find that they are bad for our long-term financial well-being. Deciding how to allocate your funds is hard. This article shares some recommended do’s and don’ts.

Our practice continues to benefit from referrals from our clients and friends. Thank you for your trust and confidence.

We hope you find the above posts valuable. If you would like to talk to us about financial topics including your investments, creating a financial plan, saving for college, or saving for retirement, please complete our contact form. We will be in touch. We can schedule a call or a virtual meeting via Apprise Wealth Management’s Zoom account.

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