December 2016 Newsletter to Clients

Enjoy this month’s edition that features Bob’s update on the economy, important TD Ameritrade year-end deadlines and holiday open house reminder.

Economic Outlook: I cannot remember being as optimistic about our financial future as I am today.  Over the next few years we hope to witness all three branches of government working together to make America Great again. I do not intend to discuss anything political but from a practical point of view, the giant ship (our Government) is on a major turn. We have little to fear about the long term direction of our economy and the stock market.

This country needs economic growth between 3% and 4%, not the stagnant growth rate of recent years. Lower taxes and reduced regulation are important moves in that direction. We can expect an uptick in inflation which is already evidenced in the rise in longer term interest rates. LIBOR (London Inter-Bank Offering Rate) is the equivalent to the old Prime Rate for businesses. This rate ranged from 5.32% (1-month) to 5.43% (12 months) in mid-2007 (Pre-collapse). At the beginning of 2016 those rates were .17% to .63% and now have risen to .58% to 1.63%. What does this mean? According to Steve Forbes, of Forbes Magazine, higher rates will fuel financial institutions to loan money more readily. He maintains that the Fed holding rates at super low rates has done more harm than good. Low rates are good for the Government which has $22.5-trillion in debt but not otherwise. Millions of investors have been unfairly penalized. As Forbes said, banks don’t want to loan at these low rates.

My outlook for all clients is the stock market continuing its climb over the next five years.

Tax Planning: We want to make you aware of several approaching year-end activities with potential tax implications for 2016 including the dates which action must be taken in order for TD Ameritrade to meet the December 30 deadline. (December 31 falls on a Saturday this year.)

Deadline for Required Minimum Distributions (RMDs): Clients who are 70½ or older or those who have BENEFICIARY IRAs must take an RMD from their IRA and/or their Qualified Retirement Plans for the 2016 tax year. All RMDs must be withdrawn by December 30, 2016, with the exception of RMDs for clients who turned or will turn 70½ during this calendar year; these clients may defer their first distribution until April 1, 2017.

Deadline for Roth IRA Conversions: Clients must submit a Roth Conversion Form in good order by December 22, 2016. Forms received after that date will be processed by TD Ameritrade on a best-efforts basis.

Deadline for Establishing a 2016 QRP: QRP’s for 2016 must be established by December 30, 2016.

Charitable Gift Deadlines:

• Monday, December 19 - Gift requests of mutual funds
• Thursday, December 22 - Gift requests of cash via check and/or federal funds wire
• Thursday, December 22 - Gift requests between accounts custodied at TD Ameritrade

Holiday Open House: Moneywatch Advisors will host a Holiday Open House on Wednesday, December 14 from 4-7:00 pm.

Thank you for your continuing confidence.

Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.​​