Hope you are all doing well. All three major U.S. indexes closed lower this week. Inflation and geopolitical concerns weighed on the market. The S&P 500 fell 1.01%, the Dow Jones Industrial Average dropped 0.77%, and the Nasdaq Composite declined 1.40%. Sam Neill passed away this week. I broke down this week’s update using quotes from his character, Dr. Grant, in Jurassic Park.
I don’t want to jump to any conclusions, but look… we have just been suddenly thrown back into the mix together. How can we possibly have the slightest idea what to expect? — Sam Neill
After a small break in the fighting, the US and Iran are back at it. Escalating US-Iran tensions and attacks that killed American troops pushed global crude prices above $85 a barrel. Raising investor concerns about international shipping chokepoints. The longer the conflict goes on, the less likely the Federal Reserve is to cut rates. It is impossible to handicap how long this conflict will actually last. The fact that oil hasn’t gone up more shows that markets are adjusting to this new normal.
These are being bred… they’re learning. — Sam Neill
Have a newborn child or grandchild? Develop them into a lifelong saver. Trump accounts went live on the 4th of July. They should not be disregarded. The government’s $1,000 seed contribution is not the biggest advantage. The biggest wealth-building opportunity in these new accounts comes nearly two decades later, when young adults can convert the accounts into Roth IRAs. This creates an ability to potentially lock in decades of tax-free compounding interest. Most of the attention surrounding Trump Accounts has centered on the federal government’s $1,000 seed contribution for eligible children born between 2025 and 2028. Trump Accounts allow parents, grandparents, and others to contribute up to $5,000 annually for children younger than 18. Employers also may contribute up to $2,500 annually, subject to the overall contribution limit. Unlike custodial Roth IRAs, children do NOT need earned income to receive contributions. That is a significant advantage because you can make contributions from the day a child is born. During childhood, contributions grow tax-deferred in low-cost U.S. stock index funds and exchange-traded funds. On January 1 of the year the child turns 18, their account automatically converts to a traditional IRA. Here’s where you have an opportunity to improve your young one’s financial future. Rather than simply leaving the account as a traditional IRA, convert the balance into a Roth IRA. Most 18-year-olds won’t have a lot of income, and taxes on the conversion will likely be minimal. Future investment growth and qualified retirement withdrawals become permanently tax-free.
You can use my calendar link below to schedule a phone or Zoom appointment at any time. The calendar link allows you to schedule a call as early as tomorrow. If you have a time-sensitive issue and difficulty reaching me by email or phone, it’s generally best to use the calendar link to schedule a 15-minute appointment. If it has been a while since your last review and you aren’t currently on my calendar, please schedule an appointment.
