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Corporate fundamentals are in good shape, equity markets continue to outperform and bonds should help diversify portfolios

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Changing your investments solely because it is a US presidential election year is not the best strategy.  Instead, focus on your long-term goals, risk tolerance, and overall portfolio diversification.  While election years introduce uncertainty, long-term stock market trends are driven by larger economic forces like corporate earnings, interest rates, and global events.  

It is easy to think that things are bad (or will become worse) here in the US and around the world based on what we hear on the news and via social media.  It is even more so during election season!

When the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) was passed in December 2019, it brought big changes to the post-death treatment of distributions from Individual Retirement Accounts (IRAs). One major change was eliminating the “stretch” treatment of distributions for most non-spousal inherited IRAs. Most of us will be impacted by this change if we are a named beneficiary on a non-spousal IRA & the owner of the IRA is deceased.

The S&P 500 recouped its April (-4.16%) decline and posted its 23rd new closing high of the year, up 15.3% year to date.

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When you find yourself with a surplus of cash sitting idle in your bank account, it's time to strategize. Here’s how to put that money to work effectively, making every dollar count. Whether you’re eyeing investment opportunities, planning for future expenses, or simply wanting to boost your financial security, let’s explore some savvy moves you can make.

1. Maintain your Emergency Fund

When most of us think about financial plans, the focus tends to be on the long-term, particularly retirement. That makes sense because most people need to save and invest money to help cover their future expenses when they eventually stop working.

When preparing a financial plan, it is also important to be ready for potential short-term financial needs. In 2024, a number of our clients across various ages, geographies and industries have been laid off from their jobs, making it hard to predict who is at risk for short-term financial needs.

Every year at this time our neighbourhood is filled with lawn signs congratulating students for graduating from elementary, middle, or high school. For graduates, it’s an emotional time of year, particularly for teenagers who leave schools where they were accustomed to routines and embark on a new stage in their life - whether that be high school, college, or perhaps a different path altogether. For our family, we are celebrating our oldest daughter’s graduation from 8th grade.

The asset class periodic table is a useful tool to help investors understand the characteristics of different types of investments and how they may fit into a diversified portfolio. Let’s begin with the end in mind.

The asset allocation portfolio (white box in every column) illustrates how spreading investments across a variety of asset classes can reduce overall risk with more consistent relative returns: never at the top, never at the bottom.

Bonds are intended to be one of the less exciting, some might even say boring, parts of most people’s portfolios.  For retirees, bonds often make up a large part of the portfolio in order to generate needed income.  For people saving before retirement, bonds take on the role of stabilizing the portfolios, so they are not completely subject to the ups and downs of stocks.

In life, focusing on what’s within your control can be easier said than done.  The same can apply to investing and planning for retirement.  With investing and planning for retirement, there is more that is out of control, than within our control. Try not to get distracted by social media or volatile markets, and instead focus on what’s within your control including saving, investing and diversifying across asset classes.  

Let’s start with the importance of starting early and staying invested to take advantage of compounding your investment returns.    

As they did last quarter, US large cap returns continued to dominate, up 10.6% in Q1. US stocks are now at all-time highs and near-record valuations.

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