THE WEEK ON WALL STREET
Stocks fell last week amid concerns about trade with China, following an unsteady rally to record highs over the first half of the week.
The S&P 500 Index fell 2.43 percent, while the Nasdaq Composite Index declined 2.53 percent. The Dow Jones Industrial Average slid 2.73 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slipped 1.64 percent.
FACT OF THE WEEK
On October 13, 1773, French astronomer Charles Messier discovered the first spiral galaxy, dubbing it the Whirlpool Galaxy. Only in the early 2000s did scientists confirm the spiral shape of our own home, the Milky Way—one of as many as 2 trillion galaxies in the universe.
MARKET MINUTE
Stocks Set Highs Before Friday’s Drop
Stocks began the week mostly positive. However, Monday marked Day 6 of the government shutdown, and two of the three major averages powered through any bearish sentiment. The S&P 500 and the Nasdaq each advanced to record closes on fresh enthusiasm for mergers & acquisitions activity after the announcement of two deals. By contrast, the Dow fell slightly.
Stocks pushed higher midweek as investors looked past the Fed meeting minutes from September, which revealed somewhat divided opinions on interest rates. The S&P and Nasdaq both closed at record highs.
On Friday, sentiment turned negative a little over an hour into the trading session after the White House announced a tariff increase on imported goods from China. The decline, led by chip manufacturers, erased the week's gains. It was the largest single-day decline for stocks since April.
China In Focus
Meanwhile, focus turned to new export controls that China imposed on so-called rare earth metals—key ingredients for AI-powered microchips and vital resources for the defense industry. Investor concern centered mostly around AI chip companies, which have exposure to China both as customers and in terms of manufacturing.
The White House threatened to cancel its upcoming meeting with the Chinese president over the dispute. China controls approximately 70 percent of the global supply of rare earth metals, meaning a policy change can impact markets.
Separately, the government shutdown entered its second week. Shutdowns typically don’t heavily impact markets, but the uncertainty continues to hang over trading.
FINANCIAL STRATEGY OF THE WEEK
Preparing for the Expected
As Teddy Roosevelt once observed, "Old age is like everything else. To make a success of it, you've got to start young."
The challenges seniors have met throughout their lives have made them wiser and stronger, preparing them for the unique challenges that come with aging.
As we age, the potential for cognitive decline increases, ranging from simple forgetfulness to dementia. Long-term illness can sap time and energy from tending to your financial affairs in retirement. Even a decline in vision may make it harder to manage your financial affairs.
Fortunately, you can look ahead to help protect yourself and your family against the financial consequences of deteriorating health, and in many cases, insurance may play an important role.
Let's examine some of the ways you can employ insurance to help protect your financial health.
Healthcare Costs
For some, healthcare costs represent a larger share of their budget as the years pass.
Recognizing this, you may want to consider Medigap insurance to cover the expenses that Medicare does not, which can add up quickly. You also might want to consider some form of extended-care insurance, which can be structured to pay for nursing home and home healthcare services—two services that Medicare doesn't cover.
Managing Your Wealth
The involvement you have with managing your investments may change as you age. For many seniors, that sort of day-to-day responsibility is unattractive and even untenable.
If that's the case, you may wish to consider what role annuities can play. Annuities can be structured to pay you income for as long as you live, relieving you of the concern of outliving your retirement money. Certain annuities even offer extended-care benefits, which allow you to address two concerns with one decision.1
Transferring Your Estate
If you're like many seniors, you have a strong desire to leave something to your children, grandchildren, and perhaps a favorite charity. Through the use of life insurance, you can pursue these objectives. For example, life insurance can be used to create an estate or to equalize an estate transfer among your heirs.2
Insurance will never be able to prevent the health issues that come inexorably with age, but it can be used to mitigate their potential financial consequences.
1. The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contract. Withdrawals and income payments are taxed as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
2. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance.