Fifteen Percent – July 2019

One rule of thumb for funding retirement is to establish a savings rate of 15%. This savings rate is important because, unlike the market return on our investments, it is within our control. Some argue that this rate is too high, but experience has taught us that it is easier to work with abundance than it is to work with scarcity.

For the first time since 2013, the IRS has adjusted contribution limits for tax favored retirement accounts. The good news for savers/investors is that limits in 2019 are higher by $500. The so-called catch-up contributions for savers/investors aged 50 and older remain unchanged. Specifically, this means the annual IRA contribution limit is now $6,000 for savers/investors under the age of 50 and $7,000 for savers/investors aged 50 and older. If an employer doesn’t offer a retirement plan, the IRA is a fine place for anyone with an earned income to build meaningful retirement savings.

Contribution limits for employer sponsored 401(k) plans have also increased by $500 and the limit has always been much higher than for IRAs. The annual 401(k)-contribution limit is now $19,000 for participants under the age of 50 and $25,000 for participants aged 50 and older. ASG reminds all readers that the IRS allows savers/investors to participate fully in both personal IRAs and employer-sponsored retirement plans simultaneously. For example, a married couple filing jointly and over the age of 50 now have a combined annual contribution limit of $64,000 (not including employer matching dollars). This example assumes that both in the couple are working and that both respective employers offer a 401(k). ASG is aware that saving and investing this much money assumes a strong combined income and/or strict spending control.

Congress hasn’t acted on retirement legislation since 2006, but the House recently passed a bill (SECURE Act) that is now headed for the Senate. One notable feature in the bill is an increase in the age that Required Minimum Distributions begin for retirement accounts (from 70.5 to 72). ASG supports any legislation that offers older workers and retirees more choice in deciding how long to work or when to spend down retirement savings. Well known IRA consultant Ed Slott said, “I wish they went further. I would have liked to see them get rid of required distributions altogether.”

Thankfully, there is no Required Minimum Distribution for Roth IRAs. ASG promotes Roth IRAs for eligible savers/investors. Ask your adviser if a Roth saving/investment strategy or a conversion to Roth strategy makes sense for your individual circumstances. Under current law, no other account type offers tax-free gain, tax-free distribution, and tax-free transfer to heirs.

Millionaires – September 2018

As we approach the second half of 2018, there is no shortage of signals merit worthy of attention among investors. Rising interest rates, tension regarding trade policy, and mid-term elections will surely hold our attention. Meanwhile, a strengthening US economy thankfully overshadows the noise of the Oval Office and politics in general.

A durable economic expansion has created abundant employment opportunities and the corresponding prosperity is amplified among workers that are also investors. The United States continues to be home to the most millionaires, followed by Japan, Germany, and China. The combined wealth of millionaires worldwide topped $70 trillion for the first time in 2017, according to Capgemini’s 2018 World Wealth Report. The report attributed the rise in wealth to an improving global economy and strong stock market performance.

Participating in the stock and bond markets has never been easier. A company sponsored 401(k) Retirement Plan is a logical starting point for most workers and Individual Retirement Accounts are available to everyone with an earned income. Unfortunately, a persistent, self-inflicted financial literacy gap continues to plague our society. A simple portfolio of stocks and bonds funded at a mere $500 per month and earning a 7.5% annual rate of return over 35 years generates a Maturity Value of $1,028,573.

A focus on growing assets and reducing liabilities does more for financial health than a large paycheck. After all, the country is littered with examples of high earners with low or even negative net worth. So, how do some low earners build high net worth? The answer is that they live within their means and invest a few dollars every month. As clients of ASG, you probably already have a good idea of your net worth. But if you don’t, ask your advisor to calculate it for you the next time you meet for a portfolio review. A mid-year review of the role of stocks, bonds, and cash in your portfolio is time well spent. We place high value on face-to-face meetings and always welcome your calls and text messages.

The record-setting stock market performance of last year seems unlikely to repeat itself, but it is reasonable to expect stocks to outperform both bonds and cash this year and beyond. What with the Federal Reserve now moving monetary policy from accommodative to neutral, cash and bonds offer higher yields. But, it is important for bond investors to remember that bond prices fall when interest rates rise. Rising interest rates and stock market volatility may create buying opportunities. We stand ready to assist you as you reach for your goals and build your net worth.

Happy summer to all the valued clients of ASG!

Save! – April 2018

A recent Wall Street Journal headline reads, “Americans Save Less as the Good Times Roll”. Personal savings as a percentage of disposable income dropped to a 12-year low in December as consumers spent more. In our consumer-driven economy, this spending is good for businesses and is reflected in rising stock prices.

At ASG, we are not opposed to personal spending, unless it leaves saving and investing neglected. A common rule of thumb when it comes to saving for retirement or financial independence is to set the savings rate at 15%. Any number of tax favored account types can be used to separate these saved dollars and get them intelligently invested in a low-cost portfolio of stocks and bonds.

Newly enacted Tax Reform legislation improves the take home pay for most Americans. This is where the “pay yourself first” mantra helps to build a powerful offense. The timing of Tax Reform is good because this is IRA season. Your ASG advisor can help calculate contribution shortfalls for the 2017 tax year right up to the filing deadline. The best practice for IRA investing is fully funding the current year early in the year to capture dividends from stocks and interest payments from bonds. Of course, capital gains are icing on the cake.

The dramatic stock market action on Monday, February 5thalso deserves attention. To review, the Dow Jones Industrial Average dropped 1,175 points, a record. The one-day loss of 4.6 percent was painful but ranked well outside the top 50 losses by percentage for the Dow. For perspective, the largest single day loss (by percentage) was on October 19, 1987 and clocked in at -22.6%.

This recent bout of volatility did have a harder edge than usual, coming on the heels of a long period of relative market calm. As investors, we were suddenly reminded that market prices go up anddown. We were reminded that the mix of stocks, bonds, and (to a lesser degree) cash determines the risk/reward relationship of investment portfolios. Lessons in risk appetite must be relearned from time to time and ASG always stands ready to help clients determine appropriate asset allocation percentages.

It is tax season. It represents an opportunity to evaluate our earning power from work and the role of company sponsored retirement plans, as well as IRAs. When it comes to pay, what we do with what we make is more important than how much we make. This year, the Roth IRA turns twenty. As clients of ASG, you already know that no other account type offers tax-free growth, tax-free distribution, and tax-free transfer to heirs. Spread the word. The investor class is too small in these United States.

Happy Winter!

Asset Strategies Group, LLC / an Independent Registered Investment Advisor Firm

Tax Reform – October 2017

A Message to the Valued Clients of ASG:

The US tax code has grown frustratingly complex over the last 30 plus years. In Washington, an army of lobbyists applies constant pressure for special tax treatment for constituencies of all shapes and sizes. The result has been a dizzying array of exclusions, exemptions, deductions, and credits. Uncertainty among taxpayers as to whether all of this has been correctly applied is nearly universal.

At ASG, we monitor the intersection of investing and tax policy with care. Asset location is an investment strategy used by ASG to place securities such as actively managed mutual funds in tax-sheltered accounts (IRAs) and tax-free securities such as municipal bonds in taxable brokerage accounts. We remind everyone to focus on what is within their control.

The divide between Democrats and Republicans in Congress, as well as the divide between the President and Congress, is as acute as ever. Therefore, we would not be surprised if the legislative effort to reform the US tax code was met with same fate as the recent effort to replace the Affordable Care Act. In the meantime, a string of deadly hurricanes has taken center stage. An urgent need for government aid in Texas, Florida, and Puerto Rico has thankfully been met with lessons learned from Katrina.

On the monetary policy front, changes are underway following a 2-day Federal Reserve meeting that ended on September 20. Although rates were left unchanged at the time of the meeting, one more quarter percent rate increase is forecast for December and three additional rate increases are planned for 2018. On October 1, the Fed will begin to unwind another aspect of its crisis-era stimulus. Their strategy is to end the practice of fully reinvesting the principal payments of maturing bonds (bought by the Fed after the financial crisis) into new bonds. This process is deliberately slow and is not expected to disrupt the economy. As interest rates rise, a corresponding drop in the price of bonds is to be expected. This decline in price comes as a shock to some investors, but those that maintain a long-term perspective will ultimately benefit from higher yields.

As we enter the final quarter of 2017, ASG reminds investors to check in with their advisors for an end-of-year portfolio review. Your financial goals are top of mind at ASG, especially if those goals include financial freedom in retirement. The stock and bond markets have proven to be remarkably resilient in the face of a challenging political environment, a powerful 1-2 punch from catastrophic hurricanes, persistent instability in the war-torn Middle East, a nuclear threat from North Korea, and on and on. Through it all, invest we must.

Happy Fall!

Asset Strategies Group, LLC / an Independent Registered Investment Advisor Firm

Fiduciary – August 2017

Following a 60-day delay, the Department of Labor (DOL) Fiduciary Rule was implemented on June 9. The Rule affects all financial professionals who make retirement account recommendations, but there are key distinctions among the different types of businesses.

In general terms, there are two types of financial services companies that provide recommendations to retirement account owners; commission-based and fee-based. The commission based shops are broker-dealers like Edward Jones, or insurance companies like Northwestern Mutual. The fee based shops are typically independent Registered Investment Advisor (RIA) firms, although some RIAs are dually registered. ASG is a fee-only RIA and has operated as a fiduciary since it was founded in 2009.

Before the Fiduciary Rule, commission-based shops operated under the lower suitability standard which left many consumers vulnerable to conflicts of interest and hidden fees. Fiduciaries were required by law to put client interests first but most RIAs were only accessible to investors with high account balances. When we first founded ASG, only one out of twenty financial services professionals was a fiduciary.

Unlike brokers and insurance agents, many RIAs are already in compliance with the basic premise of the new DOL Fiduciary Rule. A regulation under the Rule that applies to all firms is that they charge only “reasonable compensation”. ASG was founded with low costs in mind. We recently compared our fees to the industry standard as measured by the American Association of Individual Investors (AAII):

Client Account Value


Industry Standard Annual Fee ASG Annual Fee
$100,000 1% – 1.49% 0.90%
$300,000 1% – 1.24% 0.80%
$750,000 0.75% – 1.24% 0.70%
$1,500,000 0.75% – 0.99% 0.60%
$5,000,000 0.75% – 0.99% 0.50%


Our commitment to high quality and low cost is as strong as our commitment to service. This summer, as always, we welcome your calls, emails, and texts in addition to face-to-face meetings.

Asset Strategies Group, LLC / an Independent Registered Investment Advisor Firm

Save – April 2017

Good news! This year, April 15 is on a Saturday. Emancipation Day is observed on Monday, April 17. Therefore, the tax filing deadline is April 18. Still, the window to fund an IRA for the prior year (2016) is closing. Please reach out to your advisor if you haven’t already funded your IRA for 2016 or to calculate a funding shortfall.

Setting aside funds for the future is obviously easier when earning power is strong and the scales are tipped towards abundance. But even in the face of scarcity, the job still needs to be done. Saving and investing isn’t an on again/off again proposition. It is done for our entire adult lives. The only question is how we allocate hard won savings to the major asset classes of stocks, bonds, cash, real estate, and alternatives. A key role for ASG is to provide crystal clear asset allocation advice that is unique to your individual circumstances, your risk tolerance, and your age.

The US stock market was already expensive last year from a valuation standpoint. Since then, there have been so many new records set that it is hard to keep count. The economy will have to expand at a higher rate to justify current valuations. Previously, monetary policy provided tailwind to the stock market with low interest rates. This may further unwind in 2017. We will keep a close watch on rate decisions made by the FOMC (Federal Open Market Committee) this month and again in June. If rates rise, and the interest paid to bond holders exceeds the dividend paid to stock holders, stocks will have competition for the first time in many years.

Recent research by Morningstar points out that higher prices for stocks and bonds today suggest that investors can likely expect lower returns in the future. Saving more is an elegant cure to lower expected future returns except that it means spending less. Working longer also solves the lower future return problem and many older citizens have chosen to do just that. But accepting a lower standard of living when we are old is a suboptimal outcome and we favor a little belt tightening today to better support ourselves in the future.

Now is as good a time as ever to meet with your advisor and refresh your goals. Nothing beats the value of meeting face to face. We look forward to seeing you.

Asset Strategies Group, LLC / an Independent Investment Advisor Firm

Trump – January 2017

Winston Churchill once said, “The problems of victory are more agreeable than those of defeat, but they are no less difficult.” When President Elect Donald Trump takes the Oval Office in January of 2017, he will undoubtedly face the truth of those words spoken long ago.

It should come as no surprise that the newly elected President and a Republican Congress will attempt to correct perceived policy overreach by President Obama and the Democrats. But the new Administration would be wise to take a lesson from the recent past before it engages in policy overreach itself. There is no mandate. After a contentious election for the highest office in the world, anti-Trump protests provide evidence that a sharp political divide persists among many Americans.

Radical political positions distort reality and make it harder to understand an opposing point of view. At ASG, we value open mindedness. Dissention doesn’t have to be toxic. It paves the way for a broader understanding of complex issues. The Affordable Care Act isn’t right or wrong. It has strengths and weaknesses. It has supporters and critics. It is just as irresponsible for supporters to reject criticism as it is for critics to demand that the law be immediately replaced. Consensus building is hard and time will tell if Americans and their elected officials are up to the task.

ASG often finds itself at the intersection of politics and investing. The recent Department of Labor Fiduciary Rule regarding retirement accounts and investment advice now forces broker-dealer firms and insurance companies to adapt to the same standard of client care that we already provide. ASG was founded as a fee-only Registered Investment Advisor and we have been legally bound to place your interests first from the beginning. Our partner, TD Ameritrade Institutional will continue to provide you with monthly statements and other custodial services. Our Morningstar subscription provides you with trustworthy independent investment research and accurate performance reporting. Regardless of who occupies the White House, we will stay focused on transparency, low cost, high quality, and continuous improvement.

In politics, good intentions are given the benefit of the doubt. At ASG, we don’t stop with good intentions. We are committed to improved outcomes, especially when it comes to retirement readiness. As we inch closer to 2017, we urge you meet with us to make sure that your portfolio is well aligned with your goals.

Asset Strategies Group, LLC / an Independent Investment Advisor Firm

Yellen – December 2016

On September 21, Janet Yellen and Federal Open Market Committee members left The Federal Funds Rate unchanged. Previously, the likelihood of a rise in the rate had become elevated. Even as the rate is unchanged now, the meeting notes imply that a rate increase may be warranted in December. Whether an increase in the rate comes in December or early in 2017, it is obvious that monetary policy remains highly accommodative. With fragile economic growth and low inflation, there is little reason to restrict money supply with higher interest rates.

Although the Federal Reserve is wholly independent, debates surrounding the merits of policy decisions made there are often political. As it stands, some criticism regarding Fed policy is justified. After all, an artificially low interest rate punishes saving and encourages borrowing and spending. Furthermore, what with bonds yielding less than 2% and cash yielding nothing, investors seeking a higher return bid up prices by buying stocks and other investments that carry higher risk. As a result, both stocks and bonds are expensive today. At ASG, we therefore recommend that investors prepare for lower investment returns in the years ahead.

Now that the Fed Funds Rate is unchanged, there is little to distract investors from the presidential election. The race to the White House has tightened in the polls. Firebrand Donald Trump and Establishment Candidate Hillary Clinton have abandoned the valuable space known as the political center. If independent and undecided voters are unlikely to run into the arms of a third party candidate, frustration with both major party candidates may run higher. Elevated market volatility would come as no surprise. So, what are investors to do?

Jonathan Lemco, Ph.D., a senior strategist at Vanguard and former professor of political science at Johns Hopkins University, offers valuable insight. He has studied market performance related to presidential elections dating back to 1853. He recently said, “The outcome of the election is meaningful because markets inevitably react and having some context for short-term market movements can help investors manage expectations. But in the end, short-term developments are less important to our success than the big-picture trends that will shape markets in the years ahead.”

As we celebrate autumn, a year-end portfolio review is recommended. This review will likely include the timeless investment principles of asset allocation and broad diversification. In summary, our investment advice for this contentious election season is to remain focused on things within our control.

Asset Strategies Group, LLC / an Independent Investment Advisor Firm

Brexit 2016

In a historic referendum vote on June 23, citizens in Britain chose to leave the European Union. British Prime Minister David Cameron announced he would resign and the political path forward is unknown. This disruption of the status quo is likely to linger and some political analysts say other member nations will also be emboldened to leave the European Union.   Immigration policy ranks high among the reasons for leaving the EU. Europe is struggling to absorb (and employ) a large number of immigrants/refugees from the war torn Middle East.

The fear that more terrorism will be exported from ISIS through the immigrant population adds to the turmoil. These are the conditions that the US Presidential candidates face at our own political party conventions in July. As investors, we are well served to identify the place where politics and investing collide. Political uncertainty is alive and well both at home and abroad.

Knowing that stock markets dislike uncertainty, the sharp decline around the world is no surprise. Before the aforementioned referendum vote, the US stock market had come within 1% of the record high set in May of 2015. Now that global economic growth is more likely to decelerate, the Federal Reserve may further suspend the goal of normalizing interest rates. This translates to low yields and corresponding high prices in the bond market. The 10-year Treasury bond yields approximately 1.5% and cash yields almost zero. In this setting, a 2% dividend yield on stocks looks attractive, especially when it can be bought on sale.

Elevated stock market volatility is back, following sharp corrections in August of 2015 and again in January and early February of this year. Christine Benz (Director of personal finance at Morningstar) provided wisdom when she recently wrote:

Resist fight-or-flight response in wake of Brexit vote. Focus on your risk capacity, portfolio allocations, and tax position – not the noise.

At ASG, we always welcome your calls, texts, and emails. But nothing beats meeting with us in person. As we pass the mid-point of 2016, now is an excellent time to make an appointment to review your portfolio and your personal economy.

Happy summer!

Asset Strategies Group, LLC / an Independent Investment Advisor Firm

April 2016

A powerful and sustained relief rally in US stocks has wiped out the sharp losses that characterized the start of 2016. Both professional and amateur stock market forecasters were understandably pessimistic in the face of elevated volatility. But, as is so often the case, the selling was exhausted and sentiment shifted. Our most important job in this challenging investment environment to make sure that temporary market weakness doesn’t somehow translate into permanent impairment of portfolio value.

A position in bonds was effective as ballast against stock market volatility during the aforementioned period. However, what with the yield on the 10 year US Treasury bond falling below 2% again, bonds aren’t cheap. The mantra of “lower for longer” is still in place for interest rates, especially outside the US. Uncertainty regarding global economic conditions has even put the goal of the Federal Reserve to normalize borrowing rates on hold for now.

In this setting, cash continues to yield almost nothing. In theory, a weak return on cash stimulates spending and investment. But the US consumer is still haunted by the Great Recession of 2008-09 and is busy paying down remaining debt. The overall financial fitness of consumers is hotly debated, especially by presidential candidates as they try to win votes. Our take is that although many consumers have repaired personal balance sheets, they remain cautious and psychological wounds from the past are not fully healed.

As we head deeper into spring, we keep a close eye on corporate earnings, the actions of the Federal Reserve, and the intersection of politics and investing. The long awaited Department of Labor ruling on a uniform fiduciary standard regarding investment advice is of particular interest. It serves as confirmation that we were ahead of our time when we founded ASG on the principle of the fiduciary standard of client care over the weaker suitability standard common among broker-dealer firms and insurance companies.

We welcome your calls, texts, and emails as the tax filing deadline approaches. Although we are painfully aware of the complexity of US tax law, the tax return does offer the benefit of a detailed view of your finances. With this information top of mind, now is a good time to set up a meeting with us.

Happy Spring!

Asset Strategies Group, LLC / an Independent Investment Advisor Firm