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Take a Look at the Asset Winners and Losers in 2020

Take a Look at the Asset Winners and Losers in 2020

We’re halfway through 2020, and the year has already been a rollercoaster. We’ve seen a global pandemic, record unemployment and racial protests across the country. And let’s not forget, there’s a presidential election campaign season in full swing.

Of course, the events of this year have rocked the financial markets. Between February 19 and March 23, the S&P 500 fell 33.93%. Then, from March 23 to June 18, it rose 39.24%.1

The quick rebound is certainly good news. However, given the COVID-19 pandemic is still ongoing and the election lead-up is intensifying, there’s no guarantee that the markets will stay on a positive trajectory. In fact, it’s possible the next six months could be just as volatile as the last six months.

Asset Class Winners and Losers

Believe it or not, there are some asset classes that have actually had positive returns through the first half of this year. Below are the major asset classes that have had positive returns from January 1 through May:2

Gold: 14.0%

U.S. Investment Grade Bonds: 5.5%

Treasury Inflation Protected Securities: 4.8%

U.S. Dollar Index: 2.0%

Cash: 0.5%

Foreign Developed Market Bonds: 0.1%

Of course, many of those assets, like gold and cash, are traditionally assets that investors turn to during times of volatility. Other asset classes haven’t fared so well. Here are the asset classes that declined through May of this year:2

Foreign Government Inflation-Linked Bonds: -0.4%

Emerging Market Government Bonds: -2.4%

Foreign Investment Grade Corporate Bonds: -3.5%

U.S. High Yield Bonds: -5.1%

U.S. Stocks: -5.6%

Foreign High Yield Bonds: -7.2%

Foreign Developed Market Stocks: -14.3%

U.S. REITs: -20.08%

Commodities: -21.2%

Foreign REITs: -22.7%

The Importance of Diversification

It’s impossible to predict what each asset class will do in the short-term. That doesn’t stop people from trying though. Very often short-term predictions turn out to be inaccurate.

For example, at the beginning of 2020, one major investment company said it was bullish on stocks and bearish on gold, both of which turned out to be inaccurate predictions.3 Of course, they couldn’t predict the oncoming pandemic, but that’s just one example why it’s never wise to predict returns of certain asset classes.

A more effective approach is to implement a diversified strategy that incorporates a wide range of asset classes. That way, you get positive returns from the winning asset classes to offset losses in other areas.

We can help you find the right approach for your needs and risk tolerance. Contact us today at Benefit Resource Partners. Let’s connect soon and start the conversation.

1https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_y6rwXoqdG8qStAaXrrz4DA1:0

2https://seekingalpha.com/article/4351432-major-asset-classes-may-2020-performance-review

3https://apinstitutional.invesco.com/home/2020-outlook-global-market-strategy-asset-class-outlooks

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20198 – 2020/6/22

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Is it Time for an Economic Recovery?

Is it Time for an Economic Recovery?

The first half of 2020 has been a rollercoaster ride. The COVID-19 pandemic completely altered our way of life and threw the economy into a tailspin. Most states have started the reopening process, but there is still significant uncertainty about the long-term impact of coronavirus and how long the pandemic will continue.

Federal Reserve Chairman Jerome Powell recently said the economy faces a “long road” to recovery, and predicted the process may take through 2022.1 While the recovery may be a long-term journey, there have been some signs of hope in recent months:

Stock Market Returns

The stock market had been enjoying the longest bull market in history before the coronavirus pandemic hit.2 The bull market came to an abrupt end starting in late February. On February 20, the S&P hit a high of 3373. From that point through March 23, the S&P fell to 2237, a decline of 33.7%.3

However, since that time, the market has increased to 3115 through June 18. That’s an increase of 39.25%. The S&P is nearly back to its pre-COVID levels.3

Of course, it’s impossible to predict the future direction of the markets. Just because the market has been on an upswing doesn’t mean it will continue. A spike in cases or a second round of shutdowns could send the markets back into a decline.

Unemployment

The pandemic has driven unemployment to record-high levels. Through mid-June, the country had 13 consecutive weeks with more than 1 million new jobless claims. Prior to the coronavirus pandemic, the record for a single week was 695,000 in May 1982.4

The good news is that jobless claims have been declining. At the beginning of the pandemic, weekly jobless claims exceeded 6 million. In fact, up until late-May, they exceeded 2 million. So while jobless claims remain at record highs, they are on the decline. The amount of continuing claims has also dropped from 25 million in early May to just over 20 million in early June.4

Consumer Spending

Consumer spending was impacted significantly by the COVID-19 pandemic. That’s not surprising, given most states were effectively shut down for two months. In April, consumer spending dropped by 16.4%, a record monthly decline.5

In May, consumer spending set another record—this time for biggest monthly increase. The figure rose by 17.7%, driven by large increases in clothing (188%), furniture (+90%), sporting goods (+88%), and electronics (+55).5

Consumer spending by itself doesn’t mean the economy is on the path to recovery. There are still plenty of uncertainties in the economy. However, it is a good sign that consumer spending is nearly back to its pre-pandemic levels.

This is uncharted territory for all of us. The situation and data changes so fast that it’s impossible to project where the economy may be headed. A comprehensive strategy that aligns with your goals and risk-tolerance can keep you on track to meet your long-term objectives.

Let’s connect today and talk about your concerns, questions and challenges. At Benefit Resource Partners, we can help you develop and implement a strategy. Contact us today and let’s start the conversation.

1https://www.marketwatch.com/story/fed-sees-rates-near-zero-through-2022-says-asset-purchases-will-continue-2020-06-10

2https://www.cnn.com/2020/03/11/investing/bear-market-stocks-recession/index.html

3https://www.google.com/search?q=INDEXSP:.INX&tbm=fin&stick=H4sIAAAAAAAAAONgecRowi3w8sc9YSntSWtOXmNU5eIKzsgvd80rySypFBLnYoOyeKW4uTj1c_UNDM0qi4t5FrHyePq5uEYEB1jpefpFAAAU6wGESAAAAA#scso=_hL3sXpOQHsnWtAal04OQCA1:0

4https://www.cnbc.com/2020/06/18/weekly-jobless-claims.html

5https://finance.yahoo.com/news/consumer-spending-comes-back-with-a-vengeance-in-may-morning-brief-100600715.html

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20195 – 2020/6/22

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Financial Moves to Consider in a “Down” Year

Financial Moves to Consider in a
"Down" Year

It’s hard to find good news in today’s economic environment. COVID-19 single-handedly brought an end to the longest bull market in history and ushered in record-setting unemployment.

If you’re like millions of others in the country, you’ve lost income or possibly even your job. You also may have lost savings due to market volatility. Given that the coronavirus pandemic is still ongoing, there’s no telling how the economy or the financial markets may respond through the rest of the year.

Even in down years, there are still opportunities to improve your financial future. Below are three such moves to consider in your strategy:

Fund a Roth IRA.

In 2020, you can contribute up to $6,000 to a Roth IRA, or up to $7,000 if you are 50 or older.1 A Roth can be helpful because you can take tax-free withdrawals from it after age 59 ½, assuming you’ve held the account for at least five years.

Not everyone can use a Roth. If you’re a married couple making more than $206,000 or a single person making more than $139,000, you can’t contribute to a Roth IRA.2  However, if a pay cut has pushed you below the income limits, you could use this time to open a Roth.

Convert your IRA to a Roth.

Another option is a Roth conversion. This is a process that converts a traditional IRA into a Roth. You pay taxes on your IRA balance and then the net amount is deposited into a new Roth IRA. You face a current tax liability, but you get potentially tax-free income in retirement.

It may make sense to do a Roth conversion during a down year, when your income is reduced. You may be in a lower tax bracket and will thus face a lower tax bill on the conversion. A financial professional can help you explore this option.

Dollar-cost average.

Dollar-cost averaging is a strategy that can be helpful at all times, but especially during volatile periods. You contribute the same amount of money at regular intervals, like once per month. That money is then invested in a predetermined strategy.

The benefit of this is that you buy more shares when prices are low and fewer shares when prices are high. This reduces your overall cost, which increases your potential for growth. Again, a financial professional can help you implement a dollar-cost averaging strategy.

We can help you determine the right strategy in this volatile time. Contact us today at Benefit Resource Partners so we can help you develop a plan. Let’s connect soon and start the conversation.

1https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits#:~:text=For%202020%2C%20your%20total%20contributions,less%20than%20this%20dollar%20limit.

2https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2020

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 20199 – 2020/6/22

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