We hope your week is off to a great start and that you have each shaken off your election fatigue. Regardless of whether your candidate of choice was elected or not, may you each renew your hope for a brighter, kinder, safer, and more prosperous American future!
Below is our post-election market commentary and some year-end tax planning advice. Please call us at 480-553-6249 if you would like to discuss your account or set up a financial planning meeting with us. Our new office in Gig Harbor is almost finished and we look forward to giving you the option of meeting with us in your home, over Zoom, or in our office so we can help you financially plan for your future.
Post-Election Market Update
Since the election, the stock market has pretty much been in rally mode and many U.S. asset classes are at or close to all time highs. Historically, the U.S. stock market has done best under divided government and that appears to be what voters have elected. Despite two remaining run-off elections on Jan. 5th in Georgia for both senate seats there, the Senate seems likely to remain under Republican control while the White House and Congress will be under Democrat control. Hopefully, both sides can work together to bring the Country out of this pandemic and back on to the path of economic growth.
Today, stocks had one of their best days of the year on news that Pfizer’s developmental COVID-19 vaccine has had a 90% success rate in clinical trials. To put this into perspective, in a good year, the flu vaccine is only 50% effective.
Currently, there are 9 vaccines around the world in the phase 3 or final phase of clinical trials. Behind these 9 there are several dozen in Phase 1 and 2 trials and nearly 100 more in the early stages of development. Each State in the Country has worked with the Federal Government to develop a comprehensive vaccine deployment plan. We feel strongly that a successful COVID-19 vaccine will be the single biggest catalyst for stock market growth over the next 12-18 months.
We do not think that this is the time to be pulling money out of the stock market if it is not needed. We continue to believe that human ingenuity and the resilience of capitalism will provide investors with historic opportunities for wealth accumulation over the years to come!
Financial Planning Tip of the Month - Year-End Tax Planning
With roughly 7 weeks left in 2020, we encourage you to consult with your tax advisors for year-end tax planning. The 457(b) deferral limits did not change from 2020 to 2021, but many of you have not fully utilized your allowable taxable, or tax free deferrals for 2020. It is possible to temporarily increase your deferrals for Nov./Dec. if you are looking for more tax deductions this year. 457(b) participants are also eligible to contribute into regular and Roth IRA’s in addition to your maximum allowable deferrals into your 457(b), but your Adjusted Gross Income in 2020 may affect your eligibility based on how much money you make.
Additionally, if you are charitably inclined, make sure you do your gifting before 12/31 in order to realize those deductions in 2020.
As always, please reach out if we can be of assistance!
- Your DecisionPoint Financial Planning Team -