Stock Market Commentary
For the week of January 26, 2009
Wall Street see-sawed daily last week as investors absorbed wide-ranging earnings reports. With the markets closed last Monday for Martin Luther King, Jr. Day, the Dow dropped 4 percent on Inauguration Tuesday, climbed back up 3 percent on Wednesday, fell again Thursday and then staged a small intra-day rally on Friday only to end the day with a loss. For the week, the Dow fell 2.42 percent to close at 8,077.56. The S&P declined 2.11 percent to end the week at 831.95, and the NASDAQ lost 3.40 percent to finish the week at 1,477.29.
The Next Year –In the past 75 years (i.e., 1934-2008), the S&P 500 stock index has suffered total return losses of at least 20 percent in four different calendar years. The most recent was last year’s 37 percent decline. In the year after the three previous tumbles of more than 20 percent, the index gained an average of 32 percent. (Source: BTN Research)
Out Of Pocket – Households pay 31 percent of total health care expenditures (e.g., prescription drugs, hospital care, physicians’ costs, clinical services, nursing home care). The remaining 69 percent is paid by businesses, insurance companies and governments (federal, state and local). The data is from calendar year 2007 (Source: Centers for Medicare & Medicaid Services, BTN Research).
Missing The Best Days – The average total return for the S&P 500 over the past 25 years (i.e., 1984-2008) is 9.8 percent per year. If you missed the 25 best percentage gains days in those 25 years (i.e., 25 days in total, not 25 days each year), your average total return falls to 3.9 percent per year (Source: BTN Research).
Happy Together – In an AARP survey of retired married couples, 64 percent said retirement was exactly what they expected; 12 percent found it harder and 23 percent found it easier. The survey found that although 29 percent of respondents admitted they are more worried about money than before retirement, they also reported increasing more costly activities like travel, eating out and hobbies along with more family budget-friendly endeavors like exercising, volunteering and spending time with family (Source: AARP, Boomer Market Advisor).
WEEKLY FOCUS – Beneficiary Designations Trump Wills
Births, deaths, marriages, divorces – the events and people in your life are forever changing. Have your beneficiary designations changed accordingly? Your insurance policies, pension plans, individual retirement plans, annuities and other investment accounts require that you select one or more beneficiaries in the event of your death.
If you believe your will to be the only document you need to keep current, you may be surprised to learn that a beneficiary designation trumps a will. For example, if your children are named in your will, but your ex-spouse is still listed on your annuity pension plan, your ex-spouse is entitled to that money. A thorough review of beneficiary designations should be part of the finalization process during a divorce.
Unmarried people often name their parents or a sibling as a beneficiary, but fail to make a change after their marriage or birth of a child, which can leave a young family financially at risk if that spouse should die. If you don’t name beneficiaries for your assets, they may be subject to probate. Rather than those assets passing directly to your heirs, they will be lumped into your estate and dispensed by the court during probate. The assets may be subject to additional taxes as a result.
Naming contingent beneficiaries is just as important as naming primary beneficiaries. In the event a primary beneficiary passes away before you, you have made sure your assets will go to the recipient(s) you want. Some experts suggest naming two contingent beneficiaries for each primary one, just to be safe. For example, you can name your spouse as your beneficiary, with each of your children as a contingent beneficiary.
If you haven’t reviewed your beneficiary designations for your insurance, banking and investment accounts, this is a great time to do so. You can make it part of your annual review or the preparation of your tax returns. We are happy to assist you in reviewing your accounts and making any necessary changes to ensure your assets reach your intended beneficiaries at your death. Call our office to schedule an appointment.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Written by Securities America. SAI# 293132