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The RFG Weekly Wealth Report

March 27, 2017
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On Tuesday, March 21, the S&P 500 and Dow recorded a 1% decline for the first time since Oct. 11, 2016. By Friday, the S&P had posted its worst week since the election. At the same time, 10-year Treasury yields fell and the dollar dropped for the second straight week.

What happened?

As is typically the case, no simple answer can easily explain market behavior. Last week's healthcare headlines - and the House of Representatives' decision not to vote on the American Health Care Act of 2017 - may have caught the attention of many people on Wall Street. As a result, pundits will likely spend significant time debating what lies ahead for health care, tax reform, and other governmental policies. We again encourage you to look at the economic fundamentals rather than allowing news coverage to determine your financial confidence.

Recent Economic News

We did not receive a tremendous amount of new data between March 20 and 24, but three new reports did stand out: Durable Goods, New Single-Family Home Sales, and Existing Home Sales.

  • Durable goods orders increased 1.7%.
    Orders for durable goods (items expected to last) beat expectations in February and are up 5% since this time last year. While commercial aircraft orders accounted for a significant portion of the increase, data throughout the report may indicate that business investment and confidence is on the rise.
  • New single-family home sales increased 6.1%.
    In February, sales of new single-family homes hit their second-fastest growth since 2008. Even as home prices and mortgage rates rise, demand for new homes has grown by 12.8% in the past 12 months.
  • Existing home sales dropped 3.7%.
    Coming off of January, where we saw the fastest pace of existing home sales since 2007, the report missed expectations in February. Low inventory of available houses is pushing prices higher and may be keeping some potential buyers from moving forward. In the past year, median prices have risen 7.7%; meanwhile, sales are 5.4% higher.

This week, we will receive the Q4 GDP final reading, as well as insight into personal income, consumer sentiment, and consumer confidence. This and other forthcoming data provides the foundation necessary for clearly understanding the economic environment.

We understand how compelling the news and political conversations can be, and there is no denying that policies can affect the economy. However, we are here to help you gain the perspectives you need to know where you stand in your unique financial life - rather than what the headlines may urge you to believe.

Quote of the Week

"Be brave. Take risks. Nothing can substitute experience."

--Paulo Coelho

Golf Tip of the Week

Know When to Run or Fly Your Pitch Shots to the Green

Deciding when to run or fly your pitch shot is essential for choosing the right approach to the green. Make the wrong move, and you'll get stuck, sail past the hole, or miss the green altogether. With these quick tips, position yourself for an easier putt by changing your pitch trajectory.

Run the Ball

Choose this stroke when the lie is extra tight or you have nothing between you and the pin. Follow these tips to hit a low shot:

  • Stance: Keep your feet close together.
  • Ball Position: Stand with the ball in the middle, and keep your weight over your front foot.
  • Posture: Stand tall and close to the ball. You will feel your hands sit high.
  • Swing: Hit your shot like a putt and keep your hands high so they won't hinge.

Fly the Ball

Reserve flying the ball to the green for when you're sitting in deep rough or have landed on a path with obstacles in the way. Follow these tips to hit high:

  • Stance: Put your feet under your hips.
  • Ball Position: Make sure the ball is in front of you, and keep your weight over your front foot.
  • Posture: Stand slightly bent over and farther away from the ball. Keep your hands low.
  • Swing: Keep your hands low as you swing. This position keeps a hinge so your impact has a descending blow and creates extra loft.

Financial Question of the Week

How can I reduce my taxable estate?

Their are many techniques available to reduce your taxable estate. Some of the most popular include:

Gifting assets: You are currently allowed to gift $14,000 annually to any number of individuals without reducing your estate tax exclusion. If you are married, your spouse is allowed to gift another $14,000 to the same individual.

Establish AB or QTIP Trusts: Although the federal estate tax exemption is now "portable" for married couples, the state of Illinois, carries a lesser exemption that does not include portability, which is the ability of the surviving spouse to utilize the unused estate tax exemption of a deceased spouse. Properly creating and funding these trust vehicles can allow you to maximize both federal and state estate tax exemptions.

Transfer ownership of life insurance policies: By utilizing an owner outside of your estate, typically an Irrevocable Life Insurance Trust (ILIT), life insurance proceeds can bypass estate taxes. You must also live for 3 years after transferring ownership. This strategy can be used to accomplish a multitude of goals, such as funding your children's inheritance while you use a greater portion of your taxable estate to make charitable bequests.

If you would like to explore options for minimizing your estate taxes in light of your specific financial goals, please contact us to schedule a review.