Where We've Been
Businesses are largely open, stadiums mostly filled (go Suns!), and the joy of children playing is re-claiming its rightful place above fearing their expertise in germ-sharing.
Vaccine efforts certainly played a catalyst role -- setting aside if you're for, against, or indifferent to the vaccine, this isn't the forum for that debate.
Undeniable was the performance of value and small-cap stocks, tracing back to November 9th 2020 when vaccine announcements began. Large Cap Growth stocks lagged as investors appear to believe a more robust reopening lessens the advantage of a technology-focused business model. Reopening takes some of the pressure off companies that are not as reliant on technology. Q1 2021 alone saw US Small Cap Value1 post a +21.17% gain, while US Large Cap Growth2 notched just +0.94% for Q1 (see Q1 2021 Market Review). However, growing uncertainty, primarily about inflation and tax reform, tilted the domestic scales back toward Large Cap Growth stocks, +11.93% for Q2 versus +4.56% for Small Cap Value.
One word should be pinging loudly in your head: Diversification!
With no clear answer why, some explanations offered are:
- Pandemic fears persist.
- Unemployment benefits may be too generous.
- Wage competition among employers.
- Still needed at home.
- Reconsidering career options - or perhaps career location.
You've likely peeked at your home value on Zillow at least once lately. Sellers are receiving multiple offers within hours of listing, often above asking, sometimes sight unseen. Is it driven by a newfound freedom to work from home? A desire to hastily lock-in a low interest mortgage? A jump in current home value that's too juicy to pass up? An abundance of real estate investors scooping up properties? Time will tell, but as the housing market remains ablaze remember to make sound financial decisions that make a difference in your household.
Where We May Be Going
Let's be forward-looking about the things we can control and deliver successful outcomes that matter at home. Consider the following as you round out Summer travels and head into the Fall:
- Don't risk it if you can't afford to lose it. If retirement is within 5-10 years the time to develop an income plan is now. The wrong level of risk could change your retirement plans entirely.
- Tax, tax, tax. It's always a good time to be tax planning (even though it's never a fun time). Proper tax planning with your investments should be looking years ahead, especially with a number of significant tax reform proposals squarely on the table.
- Fees. Make sure your investment costs align with the value you receive. Some costs hide below the surface and not rooting them out now can mean tens of thousands less in your retirement.
- Be mindful of cyber-security. COVID forced many companies to shift their business models into e-commerce faster than they planned. Data breaches have not slowed down, they've merely become too routine to be reported as breaking news. That is a bit alarming in its own right. Be cautious to avoid landing in a mess that could take years to clean up.
News and Updates
Money.com | 36 Million Familites Are Getting Letters From the IRS About Changes to the Child Tax Credit
The Child Tax Credit will provide families up to $3,600 per child under the age of 6 and $3,000 for all other children under 18, with half of the credit being paid out in monthly installments between July 15 and December 15.
Forbes | IRS Announces 2022 Health Savings Account Limits As HSA Assets Soar
The cost of healthcare plans continues to remain sky-high. An HSA can offer many surprising benefits, some extending beyond healthcare and into retirement planning.