Peek of the Week
July 20, 2015
The Markets
Investors around the world breathed a sigh of relief
last week.
It wafted many markets higher. The NASDAQ jumped by
more than 4 percent. The Standard & Poor’s 500 Index gained 2.4 percent.
France’s national benchmark index rose 4.5 percent, Germany’s was up 3.2
percent, Italy’s increased by 3.6 percent, and China’s Shanghai Composite was
up 2.1 percent. So, what happened?
Global
markets stabilized.
First,
the Chinese stock market staunched its wounds and recovered some value, which
eased investors’ worries. According to Barron’s,
by the end of the week, the Shanghai Composite Index was up 13 percent from its
early July low. The market’s recovery owed much to Chinese government
intervention. BloombergBusiness explained:
“Chinese policy makers have gone to unprecedented
lengths to put a floor under the market as they seek to bolster consumer
confidence and prevent soured loans backed by equities from infecting the
financial system. Over the past few weeks, they’ve banned large shareholders
from selling stakes, ordered state-run institutions to buy shares, and let more
than half of the companies on mainland exchanges halt trading.”
Investors
also were appreciative when Greece reached an agreement with its creditors. It
accepted austerity measures, which voters had soundly rejected with a ‘no’ vote
on July 5 to forge a bailout agreement with European Union (EU) leaders.
That
doesn’t mean the Greek debt debacle is over. Late last week, the International
Monetary Fund issued a memo indicating it would not support a bailout for
Greece unless significant debt relief was involved. Neither the EU nor the
European Central Bank is interested in forgiving Greek debt. In fact, that was
one of the main reasons negotiations with creditors failed the first time
around.
Data as of 7/17/15
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
Standard & Poor's 500 (Domestic Stocks)
|
2.4%
|
3.3%
|
8.6%
|
16.0%
|
14.7%
|
5.7%
|
Dow Jones Global ex-U.S.
|
1.7
|
3.9
|
-5.3
|
8.1
|
4.7
|
3.1
|
10-year Treasury Note (Yield Only)
|
2.4
|
NA
|
2.5
|
1.5
|
3.0
|
4.2
|
Gold (per ounce)
|
-2.3
|
-5.5
|
-13.0
|
-10.6
|
-0.8
|
10.4
|
Bloomberg Commodity Index
|
-1.8
|
-6.5
|
-25.0
|
-11.6
|
-5.1
|
-4.7
|
DJ Equity All REIT Total Return
Index
|
0.9
|
-1.4
|
7.5
|
9.3
|
14.5
|
7.1
|
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.
Are you missing out on a possible triple
tax advantage?
If you have a high deductible health
insurance plan and you’re
not contributing the
maximum to a health savings account (HSA), then you may be missing out. A study
cited by The Washington Post found
just one in 20 people with HSAs take full advantage
of the opportunity.
In
general, HSAs offer three tax benefits:
Contributions
are federally tax-deductible up to certain limits
($3,350 for a single person and $6,650 for a family in 2015;
add $1,000 to those limits if you’re age 55 or older).
Any interest
earned on money in an HSA grows tax-deferred.
Withdrawals
used to pay qualified medical expenses are income tax free.
Tax
advantages aren’t the only reason to open an HSA. Money set aside in these
accounts can be used to pay health insurance deductibles as well as qualified
medical expenses. Although, according to The
New York Times, determining
which products can be purchased with HSA savings can be confusing:
“Under a
change enacted with the Affordable Care Act, most over-the-counter drugs, like
common allergy medications or pain relievers, are HSA-eligible
only if you get a prescription for them from your doctor. On the other hand,
items like sunscreen and contact lens solution are eligible for purchase –
without a prescription – with your HSA funds.”
HSA
assets also can be used to pay health insurance premiums (if workers are
receiving unemployment benefits) and long-term care premiums.
It’s
important to make sure HSA funds are used for qualified expenses because
any money withdrawn for non-qualified expenses is taxed as ordinary income,
plus a 20 percent penalty tax is assessed if the account holder is younger than
age 65.
That
brings us to another advantage provided by HSAs. Kiplinger.com explained
money not spent during the contribution year remains in the account. Any
earnings
grow tax-deferred and the savings that accumulate may be used for qualified
medical
expenses in the future or, once the account holder reaches age 65, for living
expenses.
In the latter case, withdrawals may be taxed as ordinary income.
Weekly
Focus – Think About It
“In theory there is no difference between theory and
practice. In practice there is.
--Yogi Berra, American
baseball player
Best regards,
Leif M. Hagen
Leif
M. Hagen, CLU, ChFC
LP Financial Advisor
P.S. Please feel free to forward this commentary
to family, friends, or colleagues. If you would like us to add them to our
list, please reply to this e-mail with their e-mail address and we will ask for
their permission to be added.
P.S.S. Also, please remind your
friends and family members becoming Medicare eligible that we offer Medicare insurance
and Part D options with NO CHARGE to work with me as their agent.
Securities
offered through LPL Financial Inc.,
Member
FINRA/SIPC.
* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* The Standard & Poor's
500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock market in general. You cannot invest directly in
this index.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees, expenses, or sales charges. Index performance is not indicative of the
performance of any investment.
* 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
afternoon gold price as reported by the London Bullion Market Association. The
gold price is set twice daily by the London Gold Fixing Company at 10:30 and
15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg 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
Total Return 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.
* Economic forecasts set
forth may not develop as predicted and there can be no guarantee that
strategies promoted will be successful.
* Past performance does not
guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly
in an index.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
* To unsubscribe from the
“Peek of the Week”, please reply to this email with “Unsubscribe” in the
subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road,
Suite 203; Eagan, MN 55122.
Sources:
