12 Smart Planning Moves to Consider as Tax Reform Looms

It’s hard to believe, but another year is almost behind us. With January just around the corner, now is a great time to review various items you may want to consider as you get set to enter 2018. Many of the IRS publications referenced below are for tax year 2016. Changes are not anticipated when 2017 guides are published.

Before we get started, let me stress that it is my job to assist and help you! I can’t overemphasize this, and I would be happy to review the options that are best suited to your situation. When it comes to tax matters, I recommend you check with your tax advisor.

Right off the bat, let’s talk about what’s on everyone’s mind–tax reform.

  1. Sweeping changes in the tax code were supposed to be enacted much earlier in the year, but Congress has been preoccupied with health care. Instead, changes appear to be in the pipeline for 2018.

Both the House and Senate have passed their respective versions of tax reform. The House and Senate will now convene a conference–a give-and-take session that is designed to craft a single bill that must then be approved by each chamber. Only then can the President sign the legislation, which will usher in a new tax code.

 That said, how we file for tax year 2018 may differ from how we file for tax year 2017.

 For example, will the alternative minimum tax (the AMT) be wiped from the tax code? Will Congress kill the estate tax?

Both the Senate and House proposals make few, if any, changes to retirement accounts, but we could see tweaks in a final bill.

Personally, I’m encouraged that the House and Senate have yet to materially alter the tax treatment for retirement accounts and the favorable treatment dividends and capital gains receive.

However, I should point out that the Senate bill changes the way we would account for capital gains, i.e., a first-in, first-out method to calculate gains when a stock is sold. That said, I’m reluctant to speculate how these key categories may emerge if tax reform is signed into law.

Investment and financial planning

  • Is it time to rebalance your portfolio? Changes in the market can cause your asset allocation to shift. As we head into the homestretch, we’ve witnessed strong gains in stocks this year, both domestic and international. Year-end is a great time to review your portfolio and make any necessary adjustments.

Typically, I would counsel that profits should be taken next year, pushing the tax burden into tax year 2018.

But I must caution that there is an outside possibility the final version that may land on the President’s desk could produce changes in how capital gains are treated.

  • Review your income or portfolio strategy. Are you reaching a milestone in your life such as retirement or a change in your circumstances? Has your tolerance for taking risk changed? If so, this may be just the right time to evaluate your approach.

However, let me caution about making changes based simply on market performance.

One of my goals has always been to remove the emotional component from the investment plan. You know, the one that encourages investors to load up on stocks when the market is soaring and to sell when stocks have taken a beating.

We know that markets rise and fall. I get that declines can be unnerving, I really do. Yet over the long term, markets rise much more than they fall.

While stocks have been on a record run, it’s a good time for me to once again remind you that a disciplined approach that avoids emotional decisions has historically been the shortest path to reaching one’s financial goals.

I know I’ve said this before, but it is a key principle for successful investing.

  • Take stock of changes in your life and review insurance and beneficiaries. Let’s be sure you are adequately covered. At the same time, it’s a good idea to update beneficiaries if the need has arisen.

Tax planning in the context of possible changes in the tax code

  • Tax loss deadline. You have until December 31, 2017 to harvest any tax losses and/or offset any capital gains. But be careful. There are distinctions between short- and long-term capital gains, and you must be aware of wash-sale rules (IRS Publication 550) that could disallow a capital loss.
  • This brings us to mutual funds and taxable distributions. This is a topic best discussed by using an example: If you buy a mutual fund on December 18 and it pays a dividend and capital gain December 20, you will be responsible for paying taxes on the entire distribution, even if the capital gains and dividends collected by the fund occurred throughout the entire year.

Yet, following the distribution, the net asset value of the fund will fall by the amount of the payout. Put another way, your investment in the fund remains the same. It’s a tax sting that’s best avoided. Therefore, it is usually a good idea to wait until after the annual distribution to make the purchase.

  • Required minimum distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 70½, regardless of whether he or she is retired (IRS Retirement Plan and IRA Required Minimum Distributions FAQs).

The first payment can be delayed until April 1 of the year following the year in which you turn 70½. For all subsequent years, including the year in which you were paid the first RMD by April 1, you must take the RMD by December 31 of that year.

The RMD rules also apply to 401(k), profit-sharing, 403(b), 457(b) or other defined contribution plans as well as SEP IRAs and Simple IRAs.

Don’t miss the deadline or you could be subject to steep penalties!

  • Contribute to a Roth IRA. A Roth gives you the potential to earn tax-free growth (not just deferred tax-free growth) and allows for federal tax-free withdrawals if certain requirements are met. There are income limits, but if you qualify, you may contribute $5,500, or $6,500 if you are 50 or older (IRS Retirement Topics–IRA Contribution Limits).

If you satisfy the requirements, qualified distributions are tax-free. You can make contributions to your Roth IRA after you reach age 70½ and there are no requirements to take mandatory distributions.

You may also be eligible to contribute to a traditional IRA, and contributions may be fully or partially deductible, depending on your circumstances. The same contribution limit that applies to a Roth IRA also applies to traditional IRAs. Total contributions for both accounts cannot exceed the prescribed limit.

You can make 2017 IRA contributions until April 17, 2018 (Note: statewide holidays can impact final date).

  • Consider converting a traditional IRA to a Roth IRA. There are a number of items you may want to consider, including current and future tax rates as well as the potential for tax reform, but if the situation is right, it can be advantageous to convert to a Roth IRA.
  • College savings. Tax reform looms large over college savings accounts. A limited option, called the Coverdell Savings account (IRS Publication 970) gets the ax in the House bill. The Senate bill maintains the status quo, according to the Senate Finance Committee document, “Tax Cut and Jobs Act and College Access.”

Currently, total contributions for a beneficiary cannot exceed $2,000 in any year. Any individual (including the designated beneficiary) can contribute to a Coverdell ESA if the individual’s modified adjusted gross income for the year is less than $110,000. For individuals filing joint returns, the amount is $220,000. Contribution limits get phased out after hitting the respective limits.

If reform passes, the House proposes that Coverdell Savings Accounts be converted into 529 plans. A 529 plan allows for much higher contribution limits, and earnings are not subject to federal tax when used for the qualified education expenses of the designated beneficiary. Contributions, however, are not deductible.

  • Achieving a Better Life Experience (ABLE) account. This is a savings account for individuals with disabilities and their families. For 2017, you can contribute up to $14,000. Distributions are tax free if used to pay the beneficiary’s qualified disability expenses, which may include some education expenses (IRS Publication 907, Fidelity—ABLE).
  • Charitable giving. Whether it is cash, stocks, or bonds, you can donate to your favorite charity by December 31, potentially offsetting any income.  Did you know that you may qualify for what’s called a “qualified charitable distribution (QCD)?”  A QCD is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity (“Rules to Do an IRA Qualified Charitable Distribution”–www.kitces.com). The IRA owner must be at least 70½ when the distribution is made.

You might also consider a donor-advised fund. Once the donation is made, you can realize immediate tax benefits, but it is up to the donor when the distribution to a qualified charity may be made.


Active Duty Military Pension

If you are currently serving or active reserve you have a decision to make as of January 1, 2018 that will affect your retirement pay.  Please contact our office we will be happy to answer any questions you may have concerning your choices.

GOP Tax Bill (Currently)

“All things are ready, if our mind be so.
William Shakespeare, Henry V

You’ve probably heard that Republicans in Congress are working to enact the first major tax reform since the Reagan administration.  Rewriting our nation’s tax code is a major undertaking, and if successful, will impact everyone’s finances.  I’ve had a lot of clients ask me about it lately, so while I do not give tax advice, I thought it would be good to do a quick rundown of the Republicans’ tax plan and what the effects might be.

Taxation is a politically-charged subject, of course.  In this case, things are further complicated by the fact that tax reform is being coupled with tax cuts.  Add to that raging debates over everything from health care to our national deficit, and you can see why it’s so hard for meaningful reform to happen.  Everyone has an opinion, because everyone’s got a stake.

I have opinions of my own, of course, but I’m not a political analyst.  I’m your financial advisor.  So, I’ve tried to write this letter to be as neutral as possible.  For that reason, you’re about to see a lot of numbers.

Taxes are a big part of life, and while it’s impossible to know all the ramifications, I believe if we start mentally preparing ourselves for change, we’ll be better equipped to handle it when it comes.  Hence the quote by Shakespeare: “All things are ready, if our mind be so.”

So, without further ado, let’s have a Question & Answer session.  On the following pages are my answers to some of the most frequently asked questions I’ve been hearing on tax reform.  If you have any further questions, or would like to discuss more about how tax reform may affect you, please don’t hesitate to let me know.

Republican Tax Plan Q&A

Q: What exactly are Republicans trying to do – and why? 

Might as well start with the basics.  During last year’s presidential campaign, Donald Trump promised significant tax cuts, something long advocated by most Republican politicians.  But because Republicans now control the White House and both chambers of Congress, they decided to pair tax cuts with a more ambitious goal: rewriting the entire tax code.

Over the decades, our nation’s tax code has ballooned in size.  It contains so many provisions, credits, loopholes, and deductions that it takes a true professional – or a well-coded piece of software – to understand it all.  In fact, Republicans claim the tax code has inflated 169% over the past thirty years.1

Both parties generally agree tax reform is needed, but it’s there that consensus ends.  That’s because tax reform inevitably means changes…and even members of the same political party often disagree on what those changes should be.  That’s why there hasn’t been a significant overhaul of the tax code since 1986.

Q: What have Republicans done so far? 

On September 27, President Trump unveiled his version of tax reform, as decided on by members of his cabinet and certain key members of Congress.  From there, the action moved to the House.  (That’s because Article I of the Constitution dictates all bills raising revenue must originate in the House.)

After over a month of debate, the House Ways and Means Committee released the “Tax Cuts and Jobs Act.”  On November 6, the Committee began what’s called a “markup” of the bill, where members can propose changes and rewrites before the bill goes to the rest of the House for a vote.

On November 9, the Senate Finance Committee released their own version of the bill, which contains some significant differences.  Let’s start by examining the House version.

Q: What does the “Tax Cuts and Jobs Act” do, exactly? 

Okay, take a deep breath.  There’s a lot of ground to cover here.  Broadly speaking, the bill does the following:

  • Reduce the number of personal income brackets
  • Remove or restrict many different tax breaks
  • Abolish both the estate tax and the alternative minimum tax
  • Cut corporate tax rates

Let’s take each of these one at a time.

Personal Income Brackets

Currently, there are seven tax brackets.  This bill will reduce that number to four.  (This differs from President Trump’s original plan, which called for only three brackets.)  See the table on the following page for more information. 2

Current Tax Brackets Proposed Tax Brackets Income for Individuals Income for Married Couples
10% 12% $12,000-$45,000 $24,000-$90,000
25% 25% Up to $200,000 Up to $260,000
33% 35% Up to $500,000 Up to $1 million
39.6% 39.6% Above $500,000 Above $1 million

For most individuals earning $12,000 or less, and couples earning $24,000 or less, the tax rate is essentially zero.

Naturally, whether people actually pay more or less will come down to a variety of factors, not just which bracket they fall in.  That’s because of changes to both…

Standard & Itemized Deductions

As the IRS explains it, the standard deduction is a “dollar amount that reduces the amount of income on which you are taxed.”3  Under the Tax Cuts & Jobs bill, the standard deduction would go from $6,350 to $12,000 for singles, and from $12,700 to $24,000 for married couples filing jointly.4

But when it comes to the standard deduction, there’s a catch: you can’t take it if you itemize deductions.  So, while the bill doubles the standard deduction, that benefit could be offset for many people because of changes to itemized deductions.

Here are some changes to common itemized deductions.

Mortgage interest: Currently, people can deduct up to $1 million on mortgage interest payments for newly purchased homes.  The bill retains this deduction, but lowers the cap to only $500,000.  Additionally, homeowners can only deduct mortgage interest on their principal residence.  This deduction does not apply to a second home.4

State and local taxes: A popular deduction is to write off state and local tax payments from federal tax payments.  Originally, the Republican tax plan called for removing this particular tax break altogether, and you may have seen that reported in the news.  This did not sit well with representatives from high-tax states, however, so a compromise was reached.  Now, the bill specifies that people can still deduct up to $10,000 on local property taxes, but can no longer deduct other state and local taxes, like income or sales taxes.4

Medical expenses, tax preparation fees, alimony payments, student loan interest and moving expenses:  All these tax breaks are eliminated under the bill.5

On the other hand, the bill expands the child tax credit from $1,000 to $1,600 for any child under seventeen.  Additionally, this credit would be available to more people.  Currently, married couples making over $110,000 a year are ineligible for the tax credit; the bill raises that level to $230,000.5

Eliminating the AMT and Estate Tax

The Alternative Minimum Tax (AMT) is a tax on a certain range of high-income people, specifically those who make between $200,000 and $1 million.  It was designed to “prevent taxpayers from escaping their fair share of tax liability through tax breaks8”; however, the AMT has often been derided as unfair and needlessly complex.  The House Republican tax plan would abolish the AMT, which is welcome news for many investors.

The estate tax, meanwhile, has long been in the cross-hairs of many Republicans, who believe it’s inherently unfair to tax someone’s estate after death, since they have already paid taxes on that estate while alive.  The bill would repeal this tax entirely, albeit not until 2024.

Corporate Tax Rates

One of the centerpoints of the bill is what it does for businesses.  Here are some of the most significant changes:

  • Permanently reduce the top corporate tax rate from 35% to 20%. Additionally, the bill would abolish the corporate version of the AMT.6
  • Allow businesses to write off any new equipment costs. However, this deduction expires after five years. 6
  • Decrease the pass-through rate to 25% from 39.6%.6 A pass-through is a type of business where business income is passed directly to the owners.  That means only the owner is taxed, not the business itself.  This is designed to prevent business owners from effectively having to pay taxes twice, on both their personal income and their business income.
  • Create a minimum tax on foreign earnings so corporations can’t just move their money overseas and not pay taxes. 6

Q: What does the bill NOT do? 

During the runup to the bill’s release, the media reported many possible changes, some of which didn’t end up making it into the final bill.  For example:

  • Previously, it was reported that some Republicans were considering lowering the cap on 401(k) pre-tax contributions. This is NOT in the current bill.
  • The bill also does NOT make any changes to the Earned Income Tax Credit, a break specifically for lower-income families.
  • Most importantly for investors, the bill leaves taxation on investment income untouched. This includes taxes on dividends and capital gains.  However, it should be noted that some investors may pay less in taxes on investment income because the plan would move them to a lower tax bracket.

Q: Okay, so what happens now? 

In two words: a lot.

In more words: as of this writing, Senate Republicans have just released their own tax plan.  (More on this in a moment.)  Assuming both bills pass in their respective chambers, the Joint Committee on Taxation would take over.  This is a small group of senators and representatives whose job is to meld the two bills into one before sending it to the White House for the president’s signature.

Here’s the thing: while all that sounds simple enough, politics make it anything but.

Currently, Republicans own a much slimmer majority in the Senate than they do in the House.  As a result, they have two options when it comes to passing a tax bill: recruit Democratic support, or use a process called budget reconciliation.

Given the unlikelihood of the two parties working together, Republicans are likely to use the second approach.  Reconciliation allows certain bills that change spending, revenue, or federal debt to be passed with a simple majority.  That means Republicans in the Senate can pass their bill with only 51 votes.  To use budget reconciliation, though, the bill must not increase the Federal deficit by over $1.5 trillion over ten years.7

While budget reconciliation effectively gives Republicans a way to hold off Democratic opposition, it also creates a problem.  They cannot afford any dissension in their own ranks.  If more than a few Republicans decide not to back the bill, reconciliation dies – and in all likelihood, the bill with it.  This is what happened when Senate Republicans tried to repeal the Affordable Care Act earlier in the year.

Here’s why this little civics lesson matters: the Senate Republicans’ plan contains significant changes from the House version, in order to win the support of both moderate and conservative Republicans senators, who tend to have different priorities.

Q: What differences does the Senate version of the bill contain? 

A few examples: under the Senate version, the new corporate tax rate described above does not go into effect until 2019, whereas the House version kicks in immediately.9  Additionally, the Senate bill does not repeal the estate tax, in order to appease members of the party’s moderate wing.

But those probably aren’t even the biggest changes.  Remember how the House plan reduced the number of individual tax brackets from seven to four?  The Senate bill retains those seven brackets, although the rates for some of those brackets have changed.  The top tax bracket, for instance, would decrease from 39.6% to 38.5%.9

Furthermore, the Senate version “fully removes the ability of households to deduct their state and local taxes” from their federal taxes.9  (The House version, you’ll recall, allows people to still deduct their state and local property taxes.)

These are major departures from both the House bill and President Trump’s original plan.  It remains to be seen how the two bills will be reconciled…or if they even can be.

Q: So that means we don’t really know what the final tax bill will look like? 

Exactly.  In the end, it could be fairly close to everything we talked about in this letter.  Or, certain provisions could look very different.

Q: Then why do I need to know about any of this? 

Preparation!  When it comes to your finances, it’s always good to avoid surprises.  By knowing which changes are being considered, we can start to prepare ourselves for how those changes will affect us.  As Shakespeare said, “All things are ready, if our mind be so.”

Or, as I like to put it: “No one ever wished they were less prepared.”

Q: What do we do now? 

My team and I will continue to monitor all the news coming out of Washington.  As both the Senate and House bills move down the pipe, we will keep tabs on any changes and how they may affect you.

This letter is not intended to be a complete, exhaustive breakdown of everything in the Republican tax plan.  So, here’s what you should do: stay informed, and write down any questions you have whenever they occur to you.  Hear something on the radio that doesn’t make sense?  Write it down.  Read something in the newspaper and want to know what it means?  Write it down.  Then, feel free to contact me with any questions.  As always, I’ll do my best to answer them.

Additionally, if you would ever like me to confer with your personal tax advisor, I would be happy to do so.

Finally, always remember that we at Schwartz Financial are here to help you feel confident about your financial future.  Please let us know if there’s ever anything we can do.


1 “A Better Way: Our Vision for a Confident America,” Speaker of the House, June 24, 2016.  https://abetterway.speaker.gov/_assets/pdf/ABetterWay-Tax-PolicyPaper.pdf

2 Alice Parlapiano, “Six Charts That Help Explain the Republican Tax Plan,” The New York Times, November 2, 2017.  https://www.nytimes.com/interactive/2017/09/27/us/politics/six-charts-to-explain-the-republican-tax-plan.html

3 “Standard Deduction at a Glance,” Internal Revenue Service, https://www.irs.gov/credits-deductions/individuals/standard-deduction-at-a-glance

4 “What’s in the Republican tax reform bill,” The Washington Post, November 2, 2017.  https://www.washingtonpost.com/graphics/2017/business/tax-bill-q-and-a/?utm_term=.4b27a352d293

5 Jeanne Sahadi, “What’s in the House tax bill for people,” CNN Money, November 3, 2017.  http://money.cnn.com/2017/11/02/news/economy/house-tax-reform-bill-individuals/index.html?iid=EL

6 David Floyd, “Trump’s Tax Reform Plan,” Investopedia, November 9, 2017.  https://www.investopedia.com/news/trumps-tax-reform-what-can-be-done/

7 Bob Bryan, “Republicans just passed a huge tax reform test by the skin of their teeth,” Business Insider, November 2, 2017.  http://www.businessinsider.com/trump-gop-tax-reform-bill-deficit-debt-budget-2017-11

8 “Alternative Minimum Tax – AMT,” Investopedia, https://www.investopedia.com/terms/a/alternativeminimumtax.asp?lgl=myfinance-layout-no-ads

9 Richard Rubin, “Senate Tax Plan Differs from House,” The Wall Street Journal, November 9, 2017.  https://www.wsj.com/articles/senate-tax-plan-differs-from-house-on-individual-rates-timing-of-corporate-rate-cut-1510257621



Schwartz Financial Weekly Commentary 10/16/17

The Markets

There’s a new kid in town: narrative economics.

Last week, Richard Thaler was awarded the Nobel Prize in economics. His work in behavioral economics and finance recognizes not all economic and financial decisions are made after rational reflection. In Nudge, he wrote:

“The workings of the human brain are more than a bit befuddling. How can we be so ingenious at some tasks and so clueless at others?…Many psychologists and neuroscientists have been converging on a description of the brain’s functioning that helps us make sense of these seeming contradictions. The approach involves a distinction between two kinds of thinking, one that is intuitive and automatic, and another that is reflective and rational.”

Yale professor Robert Shiller, another Nobel laureate in economics, is exploring a field of study related to Thaler’s. It’s called narrative economics. Narratives are the stories we share with each other. They are fuel for conversation and popular narratives often become viral. During a presentation at the University of Chicago, Schiller explained narrative economics is “the study of the spread and dynamics of popular narratives, the stories, particularly those of human interest and emotion, and how these change through time, to understand economic fluctuations.”

Today, a popular narrative in financial circles focuses on Professor Shiller’s cyclically-adjusted price-earnings (CAPE) ratio, which suggests the market may be overvalued. Barron’s reported, “The CAPE, which is based on average inflation-adjusted earnings over the trailing 10 years, stands at 31, versus 32.5 in 1929 and 44 in late 1999.”

If stocks are overvalued, why do investors keep buying shares? It’s a question narrative economics hopes to help answer in the future.

Data as of 10/13/17 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor’s 500 (Domestic Stocks) 0.2% 14.0% 19.7% 10.8% 12.1% 5.1%
Dow Jones Global ex-U.S. 1.7 21.3 21.8 5.0 5.4 -0.9
10-year Treasury Note (Yield Only) 2.3 NA 1.7 2.3 1.7 4.7
Gold (per ounce) 3.0 12.1 3.1 1.9 -5.6 5.5
Bloomberg Commodity Index 2.4 -1.8 -0.4 -10.3 -10.0 -7.1
DJ Equity All REIT Total Return Index 1.6 8.4 8.8 10.4 10.3 6.1
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

self-driving cars, life-like robots, artificial intelligence, and video phones. Millennials and members of Gen Z may find the original Blade Runner movie a bit dated. After all, many of the tech innovations imagined have become a part of our daily lives and others, like mood organs, are in the works.

Mood organs were among the human enhancements imagined by Philip Dick in Do Androids Dream of Electric Sheep? (The book upon which Blade Runner was based.) A recent c|net.com article explained:

“Dick doesn’t describe the design of the mood organ or how it works, only specifying that it can stimulate or sedate the user’s cerebral cortex. Users simply dial up the emotion they want, such as 481 (awareness of the manifold possibilities open in the future) or 594 (pleased acknowledgement of a spouse’s superior wisdom).”

Neural implants are a reality already, although they’re not used to control human emotion. Thousands of people with Parkinson’s have implants to manage tremors and applications to help with epilepsy and depression are being explored, according to IEEE Spectrum.

Medical treatments are not the only applications for neural implants. Elon Musk is developing ‘neural lace,’ a brain-computer interface (BCI) that may be injected into the human body, travel through the bloodstream, and settle over the cerebral cortex. While neural lace someday may be used to treat or diagnose neurological issues, The Economist reports Mr. Musk has argued, “human beings need to embrace brain implants to stay relevant in a world which, he believes, will soon be dominated by artificial intelligence.”

Musk is not the only entrepreneur pursuing brain interfaces. IEEE Spectrum reported Mary Lou Jepsen, an MIT alumnus and tech executive, has founded a company which is working on non-invasive BCIs “for imaging and telepathy (the latter could conceivably be done by reading out thought patterns in the brain).”

It’s possible the idea of humans with superpowers may seem quaint to future generations.

Weekly Focus – Think About It

“The real question is, when will we draft an artificial intelligence bill of rights? What will that consist of? And who will get to decide that?”

–Gray Scott, Futurist philosopher

Value vs. Growth Investing (10/13/17)

Name 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
US Market 0.12 15.69 2.58 4.89 22.40 13.22 14.72
US Core 0.21 15.70 1.96 4.15 22.18 13.62 15.79
US Growth 0.31 23.25 2.31 5.32 25.82 14.30 14.98
US Large Cap 0.15 16.78 2.28 5.12 22.88 13.31 14.61
US Large Core 0.33 17.13 1.40 4.15 23.08 13.95 16.13
US Large Growth 0.39 24.56 1.93 5.39 26.46 14.70 15.35
US Large Val -0.29 9.25 3.55 5.75 19.25 11.22 12.43
US Mid Cap 0.12 13.58 2.96 4.04 20.89 13.00 15.27
US Mid Core 0.02 13.71 2.87 4.05 19.88 12.91 15.21
US Mid Growth 0.18 19.91 2.98 4.91 23.85 12.79 13.91
US Mid Val 0.15 7.30 3.03 3.04 18.76 13.19 16.71
US Small Cap -0.19 10.85 4.65 4.95 21.72 13.01 14.17
US Small Core -0.35 8.52 4.79 4.36 20.70 12.89 14.49
US Small Growth -0.25 19.34 4.47 5.64 24.65 14.30 14.14
US Small Val 0.05 5.08 4.72 4.88 19.49 11.78 13.83
US Value -0.18 8.57 3.52 5.15 19.21 11.67 13.41
 ©2004 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) is not warranted to be accurate, complete or timely. Morningstar is not responsible for any damages or losses arising from any use of this information and has not granted its consent to be considered or deemed an “expert” under the Securities Act of 1933. Past performance is no guarantee of future results.  Indices are unmanaged and while these indices can be invested in directly, this is neither a recommendation nor an offer to purchase.  This can only be done by prospectus and should be on the recommendation of a licensed professional.

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Michael L. Schwartz, RFC®, CWS®, CFS

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.  If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.


Michael L. Schwartz, RFC, CWS, CFS, a registered principal offering securities and advisory services through Independent Financial Group, LLC., a registered broker-dealer and investment advisor.  Member FINRA-SIPC. Schwartz Financial and Independent Financial Group are unaffiliated entities.


This information is provided for informational purposes only and is not a solicitation or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed.  Any opinions expressed herein are subject to change without notice.  An Index is a composite of securities that provides a performance benchmark.  Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment.  Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly.  Past performance is not a guarantee of future results.


* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.


* The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices. 


* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.


* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.


* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.


* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.


* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.


* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.


* Past performance does not guarantee future results.


* You cannot invest directly in an index.


* Consult your financial professional before making any investment decision.


* To unsubscribe from our “market commentary” please reply to this e-mail with    “Unsubscribe” in the subject line, or write us at “mike@schwartzfinancial.com”.

Is This Your 401k?

If you were working with our office, the first week of every month you would receive an email letting you know which of the investments in your company 401k plan was doing better than the Russell 3000 and where your money should be invested in.  For most people your 401k plan is the largest part of your Retirement Plan and also besides your home the largest investment you will have.

According to the latest stats less than 12% of individual ever trade their investments in the 401k plans.  Shouldn’t you take better care of your retirement?

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Financial Independence For Woman

According to one study, 37% of women over the age of 65 live alone, either because they are divorced, widowed, or never married.  When it comes to managing money, these women usually have no one else to turn to but themselves.

Request our Ebook “Financial Independence For Women”  Free for the asking.  Request at mike@schwartzfinancial.com .

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