January Wrap-Up Newsletter
by MichaelG on Mar 29, 2019
December was ugly. We did not give up or give into the temptation to sell. I appreciate the patience you showed as a group. I said in my last newsletter that I did not want to sell our excellent investments at those prices.
January? The statements will be out soon, but on average we gained about 8% in January. My software will have better numbers next week, but it looks like we are on the rebound. We are outpacing the S&P 500 (after fees!) for January. This is excellent performance because not only does the S&P have no fees, it has no cash, and no fixed income at all (bonds or mortgages). I am gratified. And I am confident that our accounts are allocated correctly.
My outlook? I think we can have a good year. Corporate profits will continue to rise and that will support higher stock prices. I also think we will arrive at some sort of agreement with China, and this will boost markets.
The bottom line is this: Employment is SO STRONG with an economy based on consumer spending, it will be hard for most businesses to not do well. The US will have stronger growth than other developed nations because our tax code no longer subsidizes companies moving profits overseas.
I have hired a very capable office Manager. Her name is Vickie Corpuz. She is the wife a long-time client, a retired math teacher, a wiz at spreadsheets and lives ¼ mile from my Beechmont office. She will be overseeing client onboarding, service requests, client communication and helping manage new client prospects from the SmartVestor service. She has done wonders for our email list. I know many of you have already spoken to her in January or met her in the office. She is going to be a great addition.
Her email address is: email@example.com
Her phone number is: 513-805-8344
How to Make a Contribution to You IRA
The most convenient method is to have your IRA linked to your local checking account, and then simply give us a call or email to pull the funds into your IRA. This is a free service and requires NO STAMPS or writing a check. We can set up regular contributions (weekly, bi-weekly, monthly, etc.) or just make contribution anytime you request (ad hoc). Recurring instructions can also be changed anytime for no charge. Reach out and we can get you set up with the bank link via email.
If you need to write a check, make the check payable to “TD Ameritrade INSTL”. The Memo section should read “2018 IRA Contribution” or 2019 if your 2018 contribution has been maxed out. Roth IRAs should have the memo section read “201X Roth IRA contribution”.
The general idea is maximizing the prior year before making contributions for the present year as this gives you largest opportunity to contribute (since there are annual limits) and thus create wealth long term.
The limits for 2019 have been increased:
2018 limits were $5,500 for those under age 50 and $6,500 for those 50 and up
2019 limits are $6,000 for those under 50 and $7,000 for us oldsters 50 and up.
Ok, so you wrote the check, now where to send it? Mail it by April 10th to my ‘official’ mailing
P.O. Box 123
Milford, OH 45150
We can scan the check in to your TD account the same day we receive it. We will make sure your contribution is recorded properly and keep record if it. If you have any questions or desire to make a contribution for either tax year to your IRA, please contact us.
Can I Make a ROTH IRA contribution?
Yes. If your income is below the threshold, you can make a Roth IRA contribution. If your income is above the threshold, you can VERY likely make what is known as a ‘back door’ Roth contribution. The ‘back door’ Roth IRA contribution is actually IRS approved. This method takes advantage of the fact that there is no income limit on the ability to convert traditional IRAs to Roth IRAs. This method requires a non-deductible Traditional IRA contribution (usually in a new traditional IRA account opened just for this purpose). Once the traditional IRA contribution is made, the funds can be converted to a Roth IRA.
See the attached charts and contact me to fund your Roth regardless of your income.
In recent newsletters I have referred to poor service at TD. In December they hired 120 new staff to service advisory firms like ours and the speed of new account opening, transfers and service requests has really improved. Things are not perfect, but it is much better. With this improvement, I am not looking to leave TD currently. It is still good to periodically compare. I was also price shopping but was unable to find a custodian where there was a clear, or across the board cost savings. One firm would be less expensive for smaller clients, but more expensive for larger clients, or the reverse. One firm would have lower mutual fund fees, but the whole picture was mixed. I am grateful TD has invested more resources into serving our needs.
Fee Schedule Change
I did reference a few months ago about desiring to change our fee schedule. Not your fee rate, or percentage, but when and how it was charged. I have decided to pursue this change. Over the next two months I will be asking most of you to sign an “addendum” to our contract. The addendum simply states that we are moving to charging fees monthly instead of quarterly. This means instead of charging 1/4th of the management fee every quarter, we would bill 1/12 of the fee monthly. The goal is to make the switch in April as quarterly fees for the first quarter have already been charged. Monthly fees match up better with the business expenses and is more attractive as I add other investment professionals hopefully later this year. We will try to accomplish most of this via a DocuSign form we send via email. I hope to begin this process in the next week or two. Small accounts, under $40,000 will continue to be billed annually.
We will be contacting many clients who have been with Bullseye over three years to formally make sure we have accurate information about your financial condition and investment goals. This is not a big deal, but it is the new compliance/regulatory theme for the year. It’s a good idea. I have a developed a form to update your financial information and Investment Policy Statement or confirm that your situation and goals have not changed. A few of these have been completed and we will be working on this throughout the year.
Also- if your investment goals, or circumstances change don’t wait. Contact us immediately.
The next newsletter will come very soon and will be the “annual disclosure” newsletter. It will have attachments that complete the annual disclosure delivery requirement. If you DON’T want to receive your annual ADV disclosures via email, let us, know and we will mail you paper copies. If we don’t hear from you, then we will email these items. If you receive my newsletters via the US Mail, then we will go ahead and simple mail those disclosures to you as normal.
In our newsletter last January, I wrote that Bitcoin was basically worthless. There was no tangible value, and there is no limit to new “alternative currencies” being issued by others. Since the peak (in Dec of 2017) Bitcoin has fallen 81%. Problems continue. Please use the internet address below to learn about the latest bitcoin disaster:
I appreciate your trust, patience and friendship. Please call me or Vickie if you have any questions.