HAPPY HOLIDAYS
from OFFIT ADVISORS!
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Favorite Philanthropy:
- American Cancer Society and American Foundation for Suicide Prevention
Interests:
- Spending time with family, friends and my fur baby Pebbles, Cooking, Pilates, Dancing
Favorite Offit Advisors Value:
- Our Team and Our Clients – We have an amazing Team, and we all work together to make sure we do the best job for our clients.
What is your philosophy on client service?
- Knowing our client’s come first and assisting them with each individual need within a timely manner and making sure they are aware of the services we provide to them.
What gets you out of bed in the morning?
- Knowing that “today” is a new day and “tomorrow” is not promised to any of us.
What could you give a 30-minute presentation about with no preparation?
Name one thing you'd spend more on to get the best quality.
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proACTION℠ Planning Series
ep. 3 | Defensive Financial Planning
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The latest from the Offit Advisors proAction Planning series. A discussion about how to protect yourself before you retire with Disability and Long-Term Care Insurance with Ben Offit, CFP®. This is for general information only and is not intended to provide specific advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Click the image above to watch the video!
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Ben Joins Carter & Tim for October Episode of the Health & Wealth Podcast
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Qatar spent about $300 billion on stadiums and groundwork to host the 2022 FIFA World Cup. That money totaled more than all previous World Cups and Olympics combined,
Vox, November 25, 2022
The auction of Microsoft co-founder Paul Allen’s art collection brought in a record $1.6 billion. Despite Allen being a discerning art collector, he recorded an average rate of just 6.2% over 18 years for the pieces he previously bought at auction.
Morning Brew, November 12, 2022
Americans are moving to Mexico at the fastest pace on record, with permits to temporarily live in the country surging 85% from the year before Covid.
Bloomberg, November 4, 2022
The smorgasbord of software needed to do any given task can make it feel like we are working multiple jobs at once. A study in Harvard Business Review suggests workers are switching from app to app and website to website, nearly 1,200 times a day – that amounts to a total of 9% of their annual time at work.
Axios, November 7, 2022
“Good ideas carried to wretched excess, become bad ideas.”
Charlie Munger
When Pennsylvania’s Senator-elect John Fetterman heads to Capitol Hill in January, exactly 10% of the Senate will have the first name Jon or John.
Washington Post, November 11, 2022
"Thanksgiving is a time to count your blessings, one by one, as each relative goes home."
Melanie White
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Ten Steps to Become a Millionaire
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Americans can become millionaires in many different ways – including real estate, business, inheritance, etc. However, I believe the surest path for most Americans is simply by saving and investing, and effectively using your company’s 401k plan.
So here is a clear 10 step path to joining the ranks of America’s 401(k) millionaires:
1) Sign up for your 401k and do it TODAY.
2) If your company offers a match, ALWAYS contribute up the full match, because it is an instant 100% rate of return. For example, if in order to get a 3% match, you need to contribute 3%, that is a 100% rate of return because irrespective of market performance, the company is putting in for you the same amount that you are. ALWAYS CONTRIBUTE AT LEAST UP TO THE MATCH, it’s hard to beat from a rate of return perspective.
3) After you are putting in the minimum to capture the maximum match, save as much as you can.
The only caveat here is if you have other more important short-term priorities or financial obligations. For example, if you need to put extra money towards buying a new home, or medical expenses those may take priority. Or if you have high interest debt, like credit card debt at 15%, it may make more sense to pay that off before putting extra money into the 401k.
Once those are paid off, redirect what you were paying towards those expenses or higher-interest debt into the 401k!
4) Take 20 minutes to see if a Financial Planner or CPA can help determine if you are better off using a Roth 401k or a Traditional 401k – the difference in taxes between now and later can really make a difference.
5) Focus on your asset allocation and investment mix, and start with a bias towards growth and stock allocation. Too many 401k investors hold far too much of their account in bonds, which should be kept to a minimum for those trying to accumulate long-term wealth. To get to millionaire status, you will need to be more of a stock owner, not a bond lender.
6) Don’t market time! Every time you get paid, invest each pay period, no matter what is happening in the markets! IGNORE THE NOISE! Don’t pay attention to the up and down movement of your account. Make automatic contributions each pay regardless of how the market is doing right now.
7) If you have the cash flow to do so, accelerate your contributions as early in the year as possible. For example, if your plan is to max out your 401k for the year, and you can do it in 6 months instead of 12 months, this gives your money more time to grow. However, before doing this, check with your HR representative to ensure that you won’t lose any of your company match by doing this.
8) Pay attention to costs of the funds and get familiar with the costs of each funds, and have a bias towards lower-cost funds.
9) Utilize funds that represent indexes. For example, you could incorporate funds that represent that S&P 500 index or International Indexes. Make sure you have diversification across the main asset classes – Large Cap, Mid Cap, Small Cap, International Developed Markets, International Emerging Markets, Real Estate, Commodities.
10) Wait until you reach full retirement age (at least 59.5 years old) to withdraw your funds, so you won’t pay a penalty for an early withdrawal. Let tax-deferred compounding work for you as long as possible!
If you follow these tips, for a few decades, it is almost certain you will become a millionaire!
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Stock Rally Continues and Bonds Join the Party in November
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Highlights
- Following sharp declines in September, the stock market has mounted a solid comeback so far in the fourth quarter with gains in October and November. Additionally, international stocks rebounded sharply during the month.
- Bonds, which did not participate in the equity rebound in October, staged a strong bounce in November as yields declined.
- The 10-year U.S. Treasury yield closed November at 3.68% compared to the October close of 4.10%.
- As expected, the FOMC raised its policy rate by another 75-basis points in November. The debate in the market is whether the Fed raises rates by a less aggressive amount at its final FOMC meeting in mid-December and into 2023.
- The economy continues to slow under the pressure of higher interest rates. However, the second reading of U.S. GDP for the third quarter of 2022 was revised higher to a 2.9% annualized growth rate, reinforcing our belief that we are not currently in a recession, but the odds of a mild recession later next year are rising.
Equity Markets
Equity index returns for November were as follows: The S&P 500 gained 5.59%, the Dow Jones Industrial Average rallied 6.04%, the Russell 3000 advanced 5.22%, the NASDAQ Composite rose by 4.51%, and the Russell 2000 Index, a measure of small-cap stocks, increased by 2.34%. Like the general trend in 2022, large, value-oriented companies fared relatively better during the month compared to growth and smaller-cap stocks. Year to date, these indices are down -13.10%, -2.89%, -14.18%, -26.13% and -14.91%, respectively.
The month started choppy after the early November FOMC meeting, which saw the Fed raise rates by 75 basis points and the continuation of the Fed’s hawkish stance toward monetary policy. However, stocks enjoyed a rather steady run from that point for the balance of the month. The VIX Index marched lower for most of the month as stocks rose and it broke below 20 in early December for the first time since August as volatility eased.
Equity strength was widespread in November, but there was some dispersion of returns. The tech-heavy NASDAQ Composite saw relative returns surpassed by most other major indices except for small-cap measures as growth remained an underperformer. The Russell 1000 Growth Index gained 4.56% for the month but is still off -23.26% for the year to date. In contrast, the Russell 1000 Value Index advanced 6.25% in November and is down a more modest -3.65% so far this year – just under 2000 basis points of better relative performance. After better relative gains in October, small caps underperformed in November, but value still outpaced growth. The Russell 2000 Growth Index rose just 1.63% in November while the Russell 2000 Value Index gained 3.06%. Year to date, those indices have declined -21.31% and -8.48%, respectively. Growth stocks are sensitive to interest rate moves and higher interest rates this year have led to underperformance of growth stocks in 2022. We continue to use our disciplined approach of seeking out what we believe to be high-quality companies with improving business conditions at what we believe are good prices and those companies can be found in both the value and growth universe.
International stocks were the real story in November with a sharp rebound in performance. As we have often discussed this year, the US Dollar Index (DXY) had broadly strengthened during most of 2022. However, it began to plateau over the last few months before dropping in November. Remember that an international stock loses value in dollar terms if the U.S. Dollar appreciates against that stock’s home currency. The removal of that significant headwind of dollar strength in November contributed to the rally in international stocks. The MSCI ACWI ex USA Index, a broad measure of international equities, gained 11.80% in November, while the MSCI Emerging Markets Index rallied 14.83%. On a year-to-date basis, these indices are down -15.37% and -18.95%, respectively.
Fixed Income
Fixed income returns were as follows for November: the Bloomberg U.S. Aggregate Bond Index gained 3.68%, the Bloomberg U.S. Credit Index rallied 4.97%, the Bloomberg U.S. Corporate High Yield Index advanced 2.17% and the Bloomberg Municipal Index improved by 4.68%. As would be expected, the 30-year U.S. Treasury Index had some of the best results, gaining 7.19% for the month as rates dropped, while the general U.S. Treasury Index advanced 2.68%. For the year to date, the returns for these indices in the same order were as follows: -12.62%. -14.89%, -10.63%, -8.79%, -31.59% and -12.01%, respectively.
The 4% level on the 10-year U.S. Treasury was breached in October and closed on 10/24 at a more than 10-year high of 4.25% – a level not seen since the credit crisis. The yield closed the month at 4.10% and continued to move lower in November, closing at 3.68%. Clearly, the overall increase in interest rates this year has put significant pressure on the bond market and returns have suffered. While short-term returns are negatively impacted by the Fed raising rates, future potential returns for bonds have become more attractive with the higher yields available making bonds a more attractive asset class. As we have previously stated, we believe the move higher in rates in 2022 has run its course at the longer end of the yield curve and we expect the 10-year yield to move lower over the balance of the year. Since that high mark on the 10-year yield in late October, longer rates have come down and created a better backdrop for bond returns, which resulted in solid gains in November – while still acknowledging that results overall in 2022 have been challenging to say the least.
Bonds have struggled this year as there has been a repricing of interest rates across the yield curve and across bond sectors under this Fed rate tightening cycle. We maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment. We also believe that the role bonds play in a portfolio, to provide stable cash flows and to help offset the volatility of stocks in the long run, has not changed.
Source: Clark Capital Benchmark Review, November 2022
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S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.
Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.
NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.
Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.
Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.
Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.
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Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
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