MidSouth Week in Review:
June 18, 2018
Weekly Update from Fund Manager Buzz Heidtke, MidSouth Investment Fund
Jun. 20, 2018 | RedChip Companies
The Dow declined 1.0% for the week and 0.4% for the day after Trump approved tariffs of 25% on about $50 billion of Chinese goods. A Chinese official said China would retaliate immediately. The S & P declined 0.4% for the week. The Fed hiked interest rates and suggested two more increases in 2018. Crude oil declined 3% today to a six week low on speculation OPEC will soon begin increasing production. Bitcoin declined from a May high of $9845 to a Wednesday low of $6178.
The soccer World Cup began this week in Moscow and will last for an entire month. Iceland (population 347,000) made the 16 team playoff but the U.S. (population 326 million) failed to make the cut. From the first match to the final game in the 20 World Cups since 1930, the S & P has posted an average loss of 1.01%, according to Bespoke Investment Group. The U.S. will hold the World Cup in 2026.
BuzzBits
HSA’s – Bolstered by triple tax advantages (tax-free contributions and growth and tax-free withdrawal if used for qualified medical expenses), the allure of HSA’s as a long term investment vehicle is growing. A recent Fidelity study showed that an average retired couple age 65 in 2018 would need $280,000 in after-tax savings to cover healthcare expenses in retirement. Only 25% of employees with access to an HSA are using one. 40% are unaware that the money in an HSA can be carried forward. 46% of HSA holders are unaware they can invest their contributions and a mere 7.7% do invest the money – Financial Planning ……. The contribution limit for a Health Savings Account (HSA) in 2018 is $3,450 (single) and $6,900 (family).
The Fact That a Sucker is Born Every Minute – is not as important to the scam artist as the certainty that so many of the victims can be recycled.
Social Security Ignorance – A survey of Americans 50 and older found that 47% failed a basic four question test on Social Security benefits. The most missed question was that 86% of the 50-59 age group did not know that you can create an account on the Social Security Administration website https://www.ssa.gov/ to view your earnings history to ensure it is accurate, now that the administration no longer mails these statements to people under the age of 60 – Investment News ….. In 16 years, Social Security will have to cut benefits by 21% if lawmakers do nothing to cure the programs shortfalls – Thomson ONE ….. The cost-of-living adjustment (COLA) is expected to top 3% in 2019, the largest Social Security payout increase in seven years – Investment News ….. 46% of Americans believe that future generations of retirees will be worse off financially than current retirees – Aegon Center for Longevity and Retirement
San Francisco – 46% of the Bay area residents say they want to move out of the area within the next few years vs. 34% in 2016. 42% say housing costs are the biggest problem facing the city. 55% say paying taxes – more than twice as much as some other states, are eating away at disposable income. 55% say the city has gotten seriously off on the wrong track – Thomson ONE
Family Health Plan Costs – offered by employers will average $28,166 this year, up from $20,000 in 2010. Employers will pay approximately 69% of the premiums – Milliman Medical Index
Connecticut – The cash-strapped state sold $500 million of bonds last week. To sell the bonds the state had to agree to limit their spending, cap future borrowing and funnel excess revenues into a reserve fund . The state has spent more than they took in for eight of the past 10 years – Wall Street Journal
Student Debt – Women carry two thirds of the student debt. Between one and four years after graduation, men paid off 38% of their debt vs. 31% of women. Women make 26% less than males, 18% one year after graduation and 20% four years after graduation – American Assoc. of University Women ….. 7 in 10 students take out loans for their degree with the average owing $30,000 after leaving school and 20% owing more than $100,000 – Thomson ONE ….. Female Millennials have saved an average of $66,700 for retirement vs. $101,500 for their male counterparts – PNC Investments survey ….. 69% of parents surveyed this year say they won’t tap their retirement accounts prematurely to pay for education vs. 60% in 2016 – Sallie Mae
Jobs Market – The Fed this week predicted the unemployment rate will drop to 3.5% this year, the lowest level in 50 years. The current rate of 3.8% has only a 62.7% job participation rate vs. 67% in 2000. The next challenge is to reintegrate the 25 to 54 age group who remain outside the workforce, particularly because of the opioid crisis – USA TODAY
Pay Off Your Mortgage? – 32 million tax filers got a mortgage-interest deduction in 2017. That number will drop to 14 million in 2018. Why? One reason is the near doubling in the standard deduction from $12,000 for single filers and $24,000 for married filers. The other is the cap on deducting - More than $10,000 of state and local income or sales and property taxes. If one elects to pay down their mortgage, having access to a home equity loan might be a good idea for emergency purposes – Wall Street Journal
A Lesson From Dad – Mary Ann Moore
When I was in Middle School in our small town, my seventh-grade teacher was particularly hard on any girl talking to a boy, even at lunch. I thought this was wrong and told my father. He asked me to sit down on the ottoman in front of his chair to tell me a story about my teacher.
“Your teacher, Laverne, was engaged when a new girl moved to town. Her fiancé broke their engagement, dated and married the new girl. Laverne was crushed and never married. Now, I’m not going to say whether I think what Laverne is doing is right or wrong, but when you think about her, I want you to include this in your thinking.”
This taught me to look for meaningful reasons in other’s words and actions.
Thank you, Daddy.
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