Broker Check

The RFG Weekly Wealth Report

July 01, 2019

The Week on Wall Street

A month of gains for stocks ended with a weekly retreat. The S&P 500 lost 0.30%; the Nasdaq Composite, 0.32%; the Dow Jones Industrial Average, 0.45%. In contrast, overseas shares, tracked by the MSCI EAFE index, advanced 0.14%.

Last month was the best June for the blue chips since 1938; the best month for the S&P, since 1955. The Dow gained 6.9% in June, the S&P 6.2%.


Walt Disney gave his housekeeper, Thelma Howard, Disney stock every year for Christmas. By the time she died in 1994, she had amassed a $9.5 million fortune, leaving half of her estate to disadvantaged children.


Trade Talks Could Soon Restart

All week, investors had one eye on Saturday’s Group of 20 summit in Japan, where President Trump and Chinese President Xi Jinping were slated to meet. This weekend, President Trump announced that he and President Xi had agreed to a resumption of trade talks between the U.S. and China. As part of that agreement, the U.S. is holding off on placing tariffs on an additional $300 billion of Chinese goods.

While trade tensions certainly remain between both countries, the news that formal discussions could resume may renew investor optimism about progress toward a trade pact.

Powell Cautions Against Adjusting Rates Too Quickly

In the meantime, Federal Reserve Chairman Jerome Powell attracted attention with new remarks on monetary policy. Powell stated last week that the Fed officials were “mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment.”

While many traders think the central bank will lower the benchmark interest rate at its July meeting, Powell noted that there was not yet consensus for a cut among Fed policymakers.

What’s Ahead

This will be a holiday-shortened trading week. The New York Stock Exchange will close early Wednesday, and all U.S. financial markets will close Thursday for the July 4 holiday. Markets reopen on Friday.


Should I pay off my mortgage?

As you near retirement, revisit the pros and cons of prepaying your mortgage and establishing a home equity line of credit.

Paying off your mortgage can substantially reduce your living expenses in retirement. On the other hand, you will lose your mortgage interest tax deduction and you might earn more by investing elsewhere.

Your return on the money you use to pay off your mortgage is whatever the mortgage costs you. If the mortgage costs 4% a year, that is your return on your money when you pay it off. Compare it with what you have earned in other investments to help you make a determination.

You should also consider diversification: If your house is your only asset, your money may be better invested elsewhere than paying into the mortgage.

If you do pay off your mortgage, preserve your access to your investment in the house by opening a home equity line of credit a few years before you retire.

Age will not prevent you from getting a home equity loan after you have retired - it is illegal for lenders to discriminate on basis of age - but you will have to meet income and credit requirements, even if your equity in the house is more than enough to cover the amount you borrow.

Please feel free to contact me if you or someone you know would like to discuss your specific options.

As always, please contact my office with any questions or financial concerns you may have.