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Gene Todd, Executive Vice President/Managing Director of First Bank's Wealth Management Group

From monthly archives: April 2017

We are pleased to present below all posts archived in 'April 2017'. If you still can't find what you are looking for, try using the search box.

Retirement Plans Business Owners

A surprising number of successful small to mid-size business owners have minimal retirement savings or do not offer a plan to their employees. When it comes to saving for retirement business owners face two main challenges, getting a late start and the responsibility of establishing a plan. The Impact of Starting Later Traditional advice suggests start saving for retirement early and let compounding magic happen. However, in the early stages of building a business most owners focus on growth and operations. Any extra capital is poured back into the business rather than saved in account with limited access until 59 1⁄2. Those who are starting to save for retirement later in life will need to aggressively put away money to catch up. For example, a 55 year old couple has $300,000 invested in a taxable account, no debt but nothing saved in retirement accounts. They want $9,000 a month for living expenses during retirement. How much would they need to save over the next 12 years to have at least an 80 ...

Economic Growth and Stock Market Returns

Should our view of near term economic growth impact how we invest? Opinions about future economic growth often differ across market participants. For example, in a survey of more than 60 economists conducted by the Wall Street Journal in June 2016, estimates of US GDP growth for 2017 ranged from 0.2% to 3.7%.1 So how should we use this data to invest in the stock market? In this regard, investors may be surprised to find that the historical link between annual GDP growth and equity returns has been quite weak. Exhibit 1 shows annual GDP growth vs. annual returns for developed and emerging markets. These plots indicate that there has not been a strong relation between GDP growth and equity returns in the same year. For example, in developed markets country/year combinations2 when GDP growth was positive, the spread in returns was substantial: 323 country/year combinations had returns above 10% while 192 country/year combinations had returns below −10%. We see a similar pattern in realized returns for ...

Capital Markets Update - April 2017

The S&P 500 closed the first quarter with a gain of 6.1%, the best quarterly performance since the fourth quarter of 2015, though the last month of the quarter was basically flat. This marked the sixth straight quarter of positive returns for the U.S. stock market and 16 out of the past 17 quarters have been positive. Also in the first quarter the stock market saw very little volatility. At one point near the end of the quarter, the S&P 500 had gone over 100 trading days without a daily drop of more than 1%. The VIX, which is a measure of volatility recorded its lowest level of volatility since 2006. Internationally, stock prices did even better with the MSCI EAFE Developed Market Index up 7.4% for the quarter, the MSCI Emerging Market Index up 11.5% and the MSCI EAFE Developed Small Cap Index up 8.1%. International returns have trailed the U.S. stock market for the past four years and valuations outside the U.S. are lower. Thus international stock markets could be playing “catch-up&rdquo ...

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