FCMA’s Model Portfolios Siezed the Year with gains, net of fees, for 2017 as follows:
Conservative Model +11.42%, Moderate Model +13.07%, and Aggressive Model +14.30%! The market recorded double digit earnings by yearend! Economic indicators are strong and unemployment has reached its lowest since pre-2008, at 4.1% as of December 2017 with GDP estimated at 2.7% for 2017.
Welcome to our newest employees at Foresight
2018 New Savings Limits Announced
The US Government has announced several savings limit increases for 2018. 401(k) savings limit raises to $18,500, and if age 50+ rises to $24,500. IRAs remain the same at $5,550 and 50+ $6,500. HSAs savings raise to $3,450 for Individual and $6,900 for a family in 2018, both up from 2017 ($3,400 Individual and $6,750 for family). Also, Social Security to raise 2% in 2018, the largest raise since 2012. See our website www.fcmadvisors.net for more details on the savings limits for 2018.
A New White Paper by Foresight: titled Retirement Plan Costs Beware! A Mutual Fund Share Class Study- and Why the Cheapest Fund Class May Not be the Best! This assists trustees of retirement plans and helps them to understand the complex pricing of the mutual funds. Contact us if you would like a copy emailed to you.
New Analytics at Foresight- Hidden Levers
Foresight has implemented a new tool called Hidden Levers which allows us to analyze portfolios by putting them through a stress test from history and simulate how the portfolio will react in today’s market. We intend to utilize this tool on all the Foresight portfolios and will review its outcomes with you in your annual review meeting.
HSAs at Foresight
We now offer Health Savings Accounts which can be invested in our Model Portfolio strategies of Aggressive, Moderate, and Conservative. The HSA savings is a triple win for the consumer because you get to save in the HSA and get a tax deduction, then it grows tax deferred, and when you use the HSA for medical expenses it is tax free! There are also optional debit cards with our HSA program. Please call if you are interested in further details 734-429-4680.
Foresight’s Outlook and Portfolio Strategies
Dow 23,000, tax cuts rumored by Washington, GDP expected to be 2.7%, and foreign countries now growing, so what’s the next good news? It does seem never ending, but the consensus is the market is going even higher! Most analyst expect 2018 to bring us even better corporate earnings and higher stock prices. Most are questioning if the growth is real and can it continue? The best news is nothing is really overheated in the economy that could cause the next crash so it is likely to continue moving into the next generational bull market. According to Alex Dryden, of JP Morgan, who recently spoke at the FPA of Michigan Annual Conference, pointed out that current stock valuations are not too high and even a small tax cut will cause an immediate wave of corporate share buy backs which equates to higher stock prices in 2018. This also would allow US corporate earnings, of $2.7 T dollars, to repatriate back the US which in turn will boost our economy.
The bond market, according to Alex Dryden, “Is like a patient stuck in the ER room”. They are on meds and the Federal Reserve keeps checking in on them hoping they are getting better, but interest rates are too low and the Federal balance sheet is too big. So, the US needs to keep raising interest rates and wean ourselves off the monetary medicine by buying back Federal bonds and tightening the money supply so long interest rates can increase. The Federal Reserve intends to raise short interest rates, buy back bonds, retire bonds, and foreign investors will begin selling US bonds in lieu of buying foreign bonds paying higher interest rates. All this will help to raise short and long-term interest rates which the US needs to do. If this all goes to plan then our next recession is way off into the future, 6-8 years, which could make this the longest bull market in history! Whenever interest rates rise it does cause the bond market to get more volatile and lose value. Foresight has been careful to hold bonds with good yields and to keep the majority of fixed income in adjustable interest-bearing bonds.
Foreign countries, developed and emerging, are now all growing! This is the first time this has occurred in 10 years. Note on the right side of the chart all countries are over 50 for the score.
Foresight began increasing the holdings in foreign investments last January 2017. This has paid off nicely since the foreign indexes have outpaced the US for 2017 and likely to in the coming years. In 2018 the US $ is expected to begin weakening. A hint is, if planning to travel abroad it would be wise to get your foreign currency now.
Our economy, in the USA, is propelled by people not the government. Therefore, the health of our economy is being fueled by the companies and people running them. There are many analysts that believe we could be heading into the longest bull market in history! Time will tell, but there are some key factors supporting this theory. Given the USA is growing at a slower rate of +2%, the millennial population is the largest workforce at 86 million, unemployment is at 4.2% with mild wage inflation, interest rates are just beginning to rise, and inflation is nil. All these are supporting indicators that our bull market could continue for quite some time.
Foresight continues to monitor the geo-political situations and continues to be optimistic. We have moved all our portfolios into their normal risk allocations and maintained the increased foreign holdings for 4Q 2017. The mutual fund portfolios will be maintained as they were for 3Q 2017 with increased weightings in foreign-large blend, foreign growth, emerging markets, world stocks, healthcare, industrials, and materials. We continue to monitor the stock portfolios weekly and have stop losses on most double digit gains within the stock portfolios. The overall belief is to be globally invested in stocks and less fixed income currently. 2017 and 2018 are both likely to be decent market years and showing no signs of a recession. If the market has a pullback this will not concern us as we believe the economy is healthy and it will recover quickly. Please contact us if you have any questions about your portfolios.
Foresight Planning Ideas
IRS Contribution Limits for 2017 and 2018: 401(k) and 403(b) savings limits for 2017 are $18,000 deferral max and for 50+ $24,000 deferral, and IRA limits $5,500 and if age 50+ $6,500. 401(k) and 403(b) savings limits are rising for 2018 to $18,500 deferral max and for 50+ $24,500 deferral, and IRA limits $5,500 and if age 50+ $6,500 for both years.
Expect a Raise in Social Security for 2018! There will be a 2% increase in Social Security payments for retirees and other recipients for 2018. This is the largest benefit increase since 2012.
New White Paper : a new white paper on Retirement Plan Costs Beware! A Mutual Fund Share Class Study- and Why the Cheapest Fund Class May Not be the Best! This assists trustees of retirement plans and helps them to understand the complex pricing of the mutual funds. Contact us if you would like a copy emailed to you.
Foresight in the News! Our firm was ranked nationally as a RIA firm for 2017 in the Financial Advisor Magazine, July 2017.
New Health Savings Accounts-HSAs with Foresight: Foresight now offers HSA accounts for your Company or Individual HSA savings. An HSA with Foresight will allow you to choose the same 3 Model portfolios of risk either Conservative, Moderate, or Aggressive. If you have a High Deductible Health Plan then you can consider opening a HSA = Health Savings Account with Foresight. The HSA will allow you to save in 2017 up to $3,400 for single and $6,750 for a family; if +55 then $4,350 for single and $7,750 for a family. The savings rates are going up in 2018 to $3,450 for single and $6,900 for family. The HSA savings are not subject to Federal Tax and will grow, much like a Roth IRA, with no tax due if used for all qualifying health expenses, note cannot be used to pay health insurance premiums. If you are interested in more information on this strategic investment idea for your healthcare savings please contact us. 2017 HDHP=minimum deductible for single $1,300 and family $2,600 and out of pocket maximum for single $6,550 and family is $13,100. 2018 HDHP=minimum deductible for single $1,350 and family $2,700 and out of pocket maximum for single $6,650 and family is $13,300.
Foresight’s New Web Portal Reporting: The Web Portal is for your protection and information security. Beginning in Nov 2016 all of our quarterly information will be sent to the Web Portal. We want our communication to be timely and beneficial to you. Go to https://cwp.morningstar.com. If you have any access issues please call or email us at 1-877-429-4690 or mgallagher@fcmadvisors.net.
Tax Information will be put in your Web Portal for ease of access. Please be sure to check here first as this will help save you time when gathering data for your tax preparer. Go to https://cwp.morningstar.com.
Did you Know? you can give your Tax preparer access to download your tax information directly into the tax software and save them a lot of input time. This will also likely save you a lot of money in tax prep fees. It is worth asking your tax preparer how this might save you. However, be sure to change your access to your custodian accounts, UID and PW, after your taxes are completed to re-secure your investment accounts.
Did you Know?: Foresight has written three white papers. Low Cost Investing- The Costly Approach? and Target Date Funds-The Next Retirement Dilemma, and most recently Retirement Plan Costs Beware! A Mutual Fund Share Class Study- and Why the Cheapest Fund Class May Not be the Best! Please email us at consultant@fcmadvisors.net if you would like a copy to read.
Did you Know? If you have Roth 401(k) it is wise to roll these funds to a Roth IRA before you turn 70 ½ because if the Roth funds are left inside a 401(k) they must take RMD (required minimum distributions) just like the pre-tax funds which defeats the purpose of letting the Roth grow! However, if you roll it over into a Roth IRA before 70 ½ then you do not need to take the RMD from the Roth IRA. This is a very important hint to remember!
Did you Know?: You can take a distribution from your 401(k) or 403(b) prior to age 59 ½ without a 10% penalty; if you have separated from service no earlier than age 55. Funds must be in a 401(k) or 403(b) and cannot be in an IRA. Additionally, if you retire and wish to begin normal distributions prior to 59 ½ then a 72-T calculation can be done to allow funds to be removed from your IRA without a 10% penalty as long as you have separated from service.
Roth IRA Ideas if interested in additional savings ideas consider opening a Non-deductible IRA. This will allow you to save the maximum in your 401(k) and also save an additional $5.5k in a Non-deductible IRA, and $6.5k if age 50+. Then convert the Non-deductible IRA to a Roth IRA! It is a way to obtain a backdoor Roth IRA funding even if you are not able to save directly into a Roth IRA.
Did you Know? you can give your Tax preparer access to download your tax information directly into the tax software and save them a lot of input time. This will also likely save you a lot of money in tax prep fees. It is worth asking your tax preparer how this might save you. However, be sure to change your access to your custodian accounts, UID and PW, after your taxes are completed to re-secure your investment accounts.
Did you Know?: Foresight has written three white papers. Low Cost Investing- The Costly Approach? and Target Date Funds-The Next Retirement Dilemma, and most recently Retirement Plan Costs Beware! A Mutual Fund Share Class Study- and Why the Cheapest Fund Class May Not be the Best! Please email us at consultant@fcmadvisors.net if you would like a copy to read.
Did you Know? If you have Roth 401(k) it is wise to roll these funds to a Roth IRA before you turn 70 ½ because if the Roth funds are left inside a 401(k) they must take RMD (required minimum distributions) just like the pre-tax funds which defeats the purpose of letting the Roth grow! However, if you roll it over into a Roth IRA before 70 ½ then you do not need to take the RMD from the Roth IRA. This is a very important hint to remember!
Did you Know?: You can take a distribution from your 401(k) or 403(b) prior to age 59 ½ without a 10% penalty; if you have separated from service no earlier than age 55. Funds must be in a 401(k) or 403(b) and cannot be in an IRA. Additionally, if you retire and wish to begin normal distributions prior to 59 ½ then a 72-T calculation can be done to allow funds to be removed from your IRA without a 10% penalty as long as you have separated from service.
Roth IRA Ideas if interested in additional savings ideas consider opening a Non-deductible IRA. This will allow you to save the maximum in your 401(k) and also save an additional $5.5k in a Non-deductible IRA, and $6.5k if age 50+. Then convert the Non-deductible IRA to a Roth IRA! It is a way to obtain a backdoor Roth IRA funding even if you are not able to save directly into a Roth IRA. Additionally, ask if your 401(k) allows for additional after-tax contributions. If so then you can add to the after-tax contributions and consider rolling them out to an IRA where you can do a conversion to a Roth IRA. This is another form of backdoor Roth!
On-line Access each year we encourage everyone to test your on-line access to your account(s) at the custodian or third party administrator for your plan. Please visit Journeyrps.com or Noblepension.com if a retirement participant. For individual clients at TD Ameritrade access Advisorclient.com for Schwab Institutional Clients access Schwaballiance.com. To access your web portal for individual accounts go to https://cwp.morningstar.com . If you have any difficulty accessing your account, please email or contact us.