Broker Check

The RFG Weekly Wealth Report

August 20, 2018

Challenges in emerging markets affected both U.S. and global stock performance last week, with the S&P 500 experiencing several down days. By market close on Friday, however, two of the three major domestics posted gains for the week. The S&P 500 added 0.59%, the Dow increased 1.41%, and the NASDAQ lost 0.29%. Meanwhile, the MSCI EAFE international stocks slipped 1.18%.


Popsicle's were accidentally invented by an 11-year-old boy in San Francisco in 1905. He left a glass of soda sitting outside, overnight, and by the next morning the soda had frozen. He liked the creation so much he began selling them at an amusement park in New Jersey.


As several reports deepened our understanding of the economy's underlying health, investors balanced the news with updates on Turkey and trade disputes. Here are some key highlights of the various developments:

Economy: Mixed Picture
The latest unemployment data beat expectations, indicating continuing strength as the labor market is near full employment. However, new home construction missed its 7.4% projected growth, increasing only 0.9% in July - following June's 12.3% decline. Nevertheless, more positive news emerged: Thanks to tax cuts, a solid labor market, and economic growth, retail sales increased 6.4% in July year-over-year. Retail sales have now risen for the past 6 months.

Turkey: Sanctions and a Tumbling Lira
On Monday, August 13, the Turkish lira hit its lowest point ever against the U.S. dollar. The U.S. has threatened more sanctions on Turkey if the country does not release U.S. Pastor Andrew Brunson. In addition, Turkey's inflation is swelling, and President Recep Tayyip Erdogan may be suppressing the central bank's ability to increase interest rates. The lira may continue to decline in value until interest rates rise. Some analysts are optimistic that these developments won't create contagion in other markets. Not only is Turkey's economy relatively small and investors have priced in some risk, opportunities still exist to help calm Turkey's challenges.

Trade Update: Positive Movement
Later in the week, we received positive updates on trade challenges with China and the North American Free Trade Agreement (NAFTA). Mexican economy minister, Ildefonso Guajardo, announced that he hoped to finalize some NAFTA negotiations by this week. In addition, officials from the U.S. and China will be meeting in Washington, D.C. this week to discuss the ongoing trade disputes. These talks come before the anticipated meeting in November between President Trump and Chinese Leader Xi. A trade war with China has been one of the market's largest concerns, so if the tension lessens, that is likely good news for equities.

Looking Ahead

This week, we'll receive more information about the housing market that reveals how this key industry is currently performing. We will also continue to track developments in trade and Turkey. As always, if you have any questions about what you read here - or what you're hearing elsewhere - we're available to talk.



If the same "dinner and a movie" date night with friends is getting tiresome, try changing it up. We recommend having a social game night! If your hosting, the responsibilities are minimal - some drinks, chips and maybe a cheese and cracker platter. However, the key is to choose a game that is relatively simple and easy to explain to your guests.

It can be hard nowadays to find the right game with so many different options available. Listed below are some of today's games that remind us of those favorite classics:



A "stretch IRA" is a strategy used in order to extend the life of an IRA for multiple generations. It allows the IRA to continue to grow tax deferred after the death of the original owner.

Federal Tax Law requires individuals to start withdrawals from IRAs at age 70.5 and the amount required each year is determined on the life expectancy of the owner. The stretch IRA takes advantage of the fact that younger beneficiaries have smaller RMDs because of the longer life expectancy. If you know your spouse will have enough money to live comfortably, then the stretch IRA is a great tool for generational wealth transfer to children, grandchildren and great grandchildren.

If you're not comfortable bypassing your spouse as your IRA beneficiary then you can instruct him or her to stretch for you. With this strategy, you name your spouse as your IRA beneficiary. He or she rolls your IRA into an IRA in his or her name and starts taking RMDs at age 70.5. Your spouse names a member of the younger generation as the IRA's beneficiary. When your spouse dies, the young beneficiary starts taking the small RMDs now based on their life expectancy.

It is important to have both primary and secondary beneficiaries for your IRAs named and you will want to limit withdrawals in order to maximize the amount left to heirs. Not all IRAs can be stretched and caution must be taken when establishing the stretch IRA with regards to taxes and your estate plan. So if you're considering this strategy consult your IRA provider and estate planning attorney.