Imber Wealth Advisors: August 2020

Sunday, August 30, 2020

Midyear Market Outlook from Wealth Managers

Lately, the economy has looked as volatile as the stock market: up for a few weeks and then back down again. This is generally attributed to the reopening of the country in early May, followed by what looks to be a gradual and sporadic reclosing due to an upswing in outbreaks of the coronavirus. In early July, Raphael Bostic, president of the Atlanta Federal Reserve Bank, observed that recent signals show the economic recovery is in danger of stalling.¹

This volatile economic environment makes it difficult for money managers who publish midyear market comments, because the outlook could change by the time those reports are published. As always, whenever you read advice and predictions from financial professionals, it’s important to view recommendations within the context of your own goals, circumstances and investment portfolio. If you’d like to discuss any potential midyear changes in your strategy, please contact us to schedule a review.

Like most industry analysts, T. Rowe Price cautions that the trajectory in the equity and credit markets will depend on containment of the virus. Most analysts agree that economic recovery is dependent on “flattening the curve” of contagion. The good news is that T. Rowe analysts believe tech companies have accelerated in both growth and market power by several years due to remote-work demands. However, much depends on how well some of our global partners respond to the health crisis. This variable could cause U.S. distributors to rethink their corporate finances and supply chains.²

Charles Schwab’s midyear outlook acknowledges that much of the market’s gains since the first outbreak of COVID-19 can be attributed to the Federal Reserve’s decision to cut interest rates and the fiscal stimulus passed by Congress. However, it is unlikely that we will see additional significant fiscal initiatives moving forward, so the market is likely to start pricing based on a real growth rate that represents lost output from consumer goods and services. With that said, high unemployment rates and low inflation are likely to continue driving quantitative easing by the Federal Reserve, which is currently increasing its balance sheet by $120 billion a month in treasuries and mortgage-backed securities.³

The chief investment officer at Merrill Lynch offers a bullish perspective for the immediate future. Their analysts believe that the markets are in the early stages of another long-term bull session with above-average valuations. They favor equities relative to fixed income and cash, as well as the prospects of global equities since many countries have rebounded from the pandemic and show signs of acceleration.⁴

Morgan Stanley also maintains a positive outlook. Based on recent market resiliency, their analysts believe a new cycle has started and that a U.S. recovery may be more “normal” than widely predicted. In fact, analysts maintain the economy will recover by early 2021, driven by global gross domestic product with 3% growth for the year.⁵

The Capital Group keeps its outlook simple: The markets will remain volatile through the rest of the year. However, it believes that investors are better off weathering the storm in the market than sitting on the sidelines, as recent downturns have demonstrated that when the market does rebound, it remains stronger, longer.⁶

At Imber Wealth Advisors, we help people in the Ann Arbor area plan for retirement. With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

¹ Kanishka Singh. Reuters. July 7, 2020. “Fed’s Bostic says U.S. recovery may be ‘levelling off’: FT interview.” https://www.reuters.com/article/us-usa-fed-bostic-idUSKBN2480G0. Accessed July 16, 2020.

² Robert W. Sharps, Justin Thomson and Mark Vaselkiv. T. Rowe Price. June 30, 2020. “Managing to the Other Side.” https://www.troweprice.com/personal-investing/resources/insights/managing-to-the-other-side.html. Accessed July 16, 2020.

³ Kathy Jones. Advisor Perspectives. June 30, 2020. “2020 Mid-Year Outlook: Fixed Income.” https://www.advisorperspectives.com/commentaries/2020/06/18/2020-mid-year-outlook-fixed-income. Accessed July 16, 2020.

⁴ Merrill Lynch. July 2020. “The Reflation Triangle.” https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/Viewpoint_July_2020_Merrill.pdf. Accessed July 16, 2020.

⁵ Morgan Stanley. June 14, 2020. “2020 Midyear Investor Outlook: Unusual Times Conventional Playbook.” https://www.morganstanley.com/ideas/global-investment-strategy-midyear-outlook-2020. Accessed July 16, 2020.

⁶ Capital Group. June 4, 2020. “U.S. Midyear Outlook: From recession to recovery.” https://www.capitalgroup.com/advisor/insights/articles/us-midyear-outlook-2020.html?cid=p55731464801&ad_id=449175591351&ext_id=&gclid=EAIaIQobChMIhP_5lrLS6gIV5QiICR1QpQPREAAYASAAEgJ3UfD_BwE&gclsrc=aw.ds. Accessed July 16, 2020.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Friday, August 28, 2020

The High Price of Health Care in America

If the U.S. health-care sector was a separate country, it would be the fourth largest economy in the world when measured by gross domestic product. Currently, the nation spends an average of $3.5 trillion annually on health care, more than Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Spain and the United Kingdom combined.¹

If you break that down by how much we spend per capita compared to other countries, it looks like this:²

U.S.: $10,246

Australia: $5,331

Germany: $5,033

Canada: $4,754

Japan: $4,168

United Kingdom: $3,858

Singapore: $2,618

It’s also worth noting that more Americans die by preventable and treatable medical conditions than in those countries, as well.³

This is one those expenses that can make it tough for consumers to save money. One reason is because health care pricing isn’t transparent. Even if you shop around for a low-cost procedure in a hospital, you’re still likely to get hit with other separate charges. For example, the expense of an out-of-network anesthesiologist who happened to be working on the day of your operation. Most patients do not get the bill they were expecting, and it often comes a few months down the road. Another reason we have a hard time curbing spending is that U.S. health care doesn’t benefit from the normal principles of capitalism. Without greater transparency of fees, there is very little competitive pricing that would normally help drive costs down.

Health care is expensive whether you’re still working or retired. There are several ways to help you save in case you have excessively high health-care costs in the future, such as a health savings account or a whole life insurance policy that allows you to tap into a growing cash account. If you’d like to learn more about flexible ways to save or help leverage assets for high care costs, please contact us.

The U.S. health care coverage problem is reaching its peak in the midst of a perfect storm: Among the millions of Americans who lost their jobs, 41% also lost their health insurance.⁴ Gilead Sciences, the maker of the remdesivir drug that has proven to be an effective treatment for COVID-19, announced it would price the medication at $3,120 per course for U.S. patients with commercial insurance. The price tag for other developed nations is $2,340 per patient.⁵

The growing cost of health care in this country is hardly a new issue. Little effort has been made toward reform of this divisive, partisan issue, and now that infection hot spots are continuing to pop up throughout the country, the coronavirus has exposed further flaws in America’s health care system. These range from the lack of a cohesive national plan, to poor federal stockpiles of supplies, to supply chain problems in manufacturing and distribution. America’s health care problems go far deeper than simply running out of ICU beds in hospitals.⁶

After the next set of elections, and once we’re hopefully beyond this pandemic, the effort to reform our national health care system will likely be a top priority in Congress

At Imber Wealth Advisors, we help people in the Ann Arbor area plan for retirement. With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

¹ Jeneen Interlandi. The New York Times. June 29, 2020. “Employer-Based Health Care, Meet Massive Unemployment.” https://www.nytimes.com/2020/06/29/opinion/sunday/coronavirus-medicare-for-all.html. Accessed July 10, 2020.

² Huo Jingnan and Pranav Baskar. NPR. June 13, 2020. “Pandemic Perspective: What The 20 Poorest And Richest Countries Spend On Health Care.” https://www.npr.org/sections/goatsandsoda/2020/06/13/864563401/pandemic-perspective-what-the-20-poorest-and-richest-countries-spend-on-health-c. Accessed July 10, 2020.

³ Ibid.

⁴ Robert Preidt. U.S. News & World Report. June 23, 2020. “Pandemic Job Losses Leaving Many Americans Uninsured: Survey.” https://www.usnews.com/news/health-news/articles/2020-06-23/pandemic-job-losses-leaving-many-americans-uninsured-survey. Accessed July 27, 2020.

⁵ Michael Erman, Ludwig Burger and Manojna Maddipatla. Reuters. June 29, 2020. “Gilead prices COVID-19 drug remdesivir at $2,340 per patient in developed nations.” https://www.reuters.com/article/us-health-coronavirus-gilead-sciences/gilead-prices-covid-19-drug-candidate-remdesivir-at-2340-per-patient-idUSKBN2401C8. Accessed July 10, 2020.

⁶ Jordan Davison. EcoWatch. July 9, 2020. “America Faces a Critical PPE Shortage, Again.” https://www.ecowatch.com/us-ppe-shortage-coronavirus-trump-2646373026.html?rebelltitem=1#rebelltitem1. Accessed July 10, 2020.

Wednesday, August 26, 2020

The Highs & Lows of Dollar-Cost Averaging

Investors who defer the same amount of money from their paycheck into a 401(k) plan at regular intervals are practicing dollar-cost averaging. By investing the same fixed dollar amount each time, the investor buys more shares when prices are low and fewer shares when prices rise.¹ The long-term effect is that the average cost of each share purchased will be lower than the average share price.²

This strategy can work great when you are trying to accumulate assets for your retirement. But what happens when you withdraw from your investments for retirement income? While dollar-cost averaging reduces the risk of investing a lump sum of money when prices peak, it increases your risk of losing previous gains if you withdraw money when prices have dropped. If a retiree receives automatic systematic withdrawals for a fixed level of income, then in months when share prices drop, he or she will likely have to sell more shares to raise the needed money. Once those shares are sold, they never have the ability to recover lost gains.³

To create a more prudent income distribution plan, you may consider incorporating some solid, reliable income in your portfolio, in addition to Social Security benefits. This could mean government-backed bonds or an insurance-backed annuity.⁴ If you’d like to discuss how to position your assets to combine both guaranteed income and growth opportunity, please contact us.

It’s a good idea to develop multiple streams of retirement income. Ideally, you want to have the flexibility to stop and start withdrawals strategically from accounts that are performing well, giving others time to recoup paper losses.⁵ Also, maintain a healthy portion of assets in a liquid account to help pay for periodic expenses when you don’t want to tap your investments.

Another option is to be flexible with your retirement budget, such as having a Plan A budget and a Plan B budget. When the markets take a downturn, you can switch to budget B and downsize your expenses, perhaps by cutting out vacations, large purchases and eating out for a while. This shouldn’t be too hard given the way people have had to reign in their lifestyle throughout the past few months; you could call it your Pandemic Budget.⁶

At Imber Wealth Advisors, we help people in the Ann Arbor area plan for retirement. With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

¹ James Chen. Investopedia. March 16, 2020. “Dollar Cost Averaging.” https://www.investopedia.com/terms/d/dollarcostaveraging.asp. Accessed July 10, 2020.

² Dan Burrows. Kiplinger. April 17, 2020. “Dollar-Cost Averaging: How Does DCA Work, And Should You Do It?” https://www.kiplinger.com/article/investing/t052-c008-s001-dollar-cost-averaging-how-does-dca-work-should-you.html. Accessed July 10, 2020.

³ Matt Becker. The Simple Dollar. April 9, 2020. “The Truth About Dollar Cost Averaging.” https://www.thesimpledollar.com/save-money/the-truth-about-dollar-cost-averaging/. Accessed July 27, 2020.

⁴ Dennis Ho. The Street. July 2, 2020. “How to Use a Deferred Income Annuity to Avoid Running Out of Money in Retirement.” https://www.thestreet.com/retirement-daily/planning-living-retirement/how-to-use-a-deferred-income-annuity-to-avoid-running-out-of-money-in-retirement. Accessed July 10, 2020.

⁵ Jeff Rose. Forbes. Nov. 2, 2017. “5 Ways To Generate Different Sources Of Income.” https://www.forbes.com/sites/jrose/2017/11/02/different-sources-income/#42d46f7137bb. Accessed July 10, 2020.

⁶ Rebecca Moore. Plan Sponsor. June 22, 2020. “Clearing Up Confusion About Retirement Timing.” https://www.plansponsor.com/in-depth/clearing-confusion-retirement-timing/. Accessed July 10, 2020.

Monday, August 24, 2020

Recovery: COVID-19 First, Then the Economy

The World Health Organization recently reported that while some countries have made effective inroads to contain COVID-19 within their borders, the pandemic is still well on the rise throughout the world.¹ Perhaps one of the most debilitating impacts of today’s global economy is that one country’s problem is now every country’s problem. Because business and personal travel is so pervasive today, it appears the only answer to economic recovery is to contain and eradicate the virus – everywhere.

Fortunately, the medical news on the COVID-19 front is starting to look up. In early June, the nation’s top infectious disease expert, Dr. Anthony Fauci, announced that the U.S. government was helping fund and conduct research for three different coronavirus vaccines and hopes to have at least one available early 2021. The World Health Organization reports that, globally, 10 vaccines are currently undergoing human trials with 126 others in development.²

Then later in June, researchers in the UK reported that a very common, affordable drug available worldwide has been found to be effective for hospitalized coronavirus patients on ventilators. Apparently, dexamethasone has no impact on milder symptoms of coronavirus, but it has been shown to help reduce mortality for some higher-risk patients.³

These recent advancements are a big step in the fight against the pandemic, but it’s important to realize that it will take time to get control of it. However, these words from Dr. Fauci may provide comfort, “Don’t despair. This will end, and we will get control over it.”⁴

In the meantime, it’s important that we each plan for a future in which medical conditions and economic downfalls are more common. If you’d like help to reassess your portfolio with the goal of generating a higher sense of financial confidence for the future, please give us a call.

It is understandable that long-term investors want to look beyond the pandemic for economic recovery and glean ideas on how to invest in the future. Clearly, one industry that’s hard at work is the health technology market. Digital health has taken off as a means of coping with patients who are better off staying at home, and health innovation funding is rapidly expanding.⁵

Bank of America Global Research, Israel anticipates several global megatrends that will have the greatest impact on the post-pandemic recovery. These include:⁶

A further shift away from reliance on Chinese manufacturing, particularly in the tech and pharma industries

A greater focus by consumers on technology and digital media – a lingering influence borne out of today’s stay-at-home recommendations

Bigger government influence at all levels, particularly in relation to tracking and preventing health crises, business models with a higher emphasis on worker benefits and more aggressive action for climate-friendly environmental initiatives

Speaking of the environment, some leaders are predicting that the pandemic may lead to more sustainable business practices. Initially, business owners are expected to be more focused on the short-term health and welfare of their businesses and employees. However, some industry leaders and policymakers insist that future investment should be channeled toward real change for a low-carbon, more sustainable future.⁷

At Imber Wealth Advisors, we help people in the Ann Arbor area plan for retirement. With a strong financial plan in place, we can help you prepare to leave the workforce and live comfortably. Take control of your financial future and give us a call at (734) 769-1719 today!

¹ Scott Neuman. NPR. June 29, 2020. “WHO Chief On COVID-19 Pandemic: ‘The Worst Is Yet To Come.’” https://www.npr.org/sections/coronavirus-live-updates/2020/06/29/885049691/who-chief-on-covid-19-pandemic-the-worst-is-yet-to-come. Accessed July 2, 2020.

² Jim Sciutto, Jamie Gumbrecht and Chandelis Duster. CNN. June 10, 2020. “US government to fund and conduct studies on three possible coronavirus vaccines, Fauci says.” https://www.cnn.com/2020/06/10/politics/vaccine-trials-funding/index.html. Accessed June 16, 2020.

³ Michelle Roberts. BBC. June 16, 2020. “Coronavirus: Dexamethasone proves first life-saving drug.” https://www.bbc.com/news/health-53061281. Accessed June 16, 2020.

⁴ Moira McCarthy. Healthline. June 8, 2020. “Dr. Anthony Fauci: COVID-19 Will End and We Will Get Control Over It.” https://www.healthline.com/health-news/dr-anthony-fauci-this-will-end-and-we-will-get-control-over-it#1. Accessed July 2, 2010.

⁵ Heather Landi. Fierce Healthcare. July 1, 2020. “Investors double down on health technology as funding reaches $9.1B in 2020.” https://www.fiercehealthcare.com/tech/investors-double-down-health-technology-as-funding-reaches-9-1b-2020. Accessed July 2, 2020.

⁶ Merrill/Bank of America Global Research. May 22, 2020. “5 Trends That Could Define Our Post-Coronavirus Lives.” https://www.ml.com/articles/post-coronavirus-life-investing-opportunities-5-trends.html. Accessed June 16, 2020.

⁷ Knowledge@Wharton. June 8, 2020. “How the Pandemic Can Lead to a More Sustainable Future.” https://knowledge.wharton.upenn.edu/article/how-the-pandemic-can-lead-to-a-more-sustainable-future/. Accessed June 16, 2020.

Friday, August 21, 2020

What the Pay Disparity Means for America

Women remain behind the curve compared to men when it comes to equal pay. With the surge of unemployment caused by the pandemic, this situation appears to have worsened. More women than men have lost their jobs in recent months. The unemployment rate for black women is higher than that of white women, black men and white men. Unfortunately, the longer the pandemic continues, the greater the damage will be to women’s careers. Moms are often responsible for childcare and home-schooling duties when classrooms shut down.¹

Women currently earn an estimated 82 cents for every $1 earned by men.² Compare the average earnings of men and women by specific age groups:³

25 to 34 years: Men, $50,076 vs. women $45,084
35 to 44 years: Men, $64,428 vs. women, $52,572
45 to 54 years: Men, $66,092 vs. women, $52,260
55 to 64 years: Men, $63,440 vs. women, $50,544

The average income for women starts to decrease after age 45, and after age 55 for men.

A two-income couple has become the norm. Many younger couples have relied on this income model to establish their housing budget, education aspirations for their children and their overall lifestyle. Having to curb that budget now, even in the short-term, may cause financial hardship. It can also be tough for middle-aged households who are actively planning for retirement. If you’re concerned about the pandemic’s possible impact on your future retirement income, we may be able to help. Feel free to contact us to discuss creating retirement strategies through the use of insurance products that can help you work toward your long-term retirement income goals.

The economic and pay disparity for women extends into retirement. According to the National Institute on Retirement Security, the median retirement income for women aged 65 and up is $47,244, whereas it is $57,144 for men — nearly a $10,000 difference annually.⁴ Women tend to outlive their husbands, so it’s important to consider the possibility of living alone for a number of years. If a wife outlives her husband for 30 years, her retirement income would be $300,000 less than if her husband outlived her for the same timeframe.

As evidenced by the disparity in retirement income, it’s clear gender pay disparity goes far beyond not earning the same amount of money as a male colleague. The largest percentage of a worker’s salary tends to go necessary household expenses, such as food, housing, utilities and transportation. Therefore, the less a person makes, the less he or she has left to save for retirement. Thus, while women may make 82 cents of every $1 earned by men, they actually own only 32 cents on the dollar. The situation is far more dire for women of color, as they own mere pennies on the dollar in terms of asset wealth relative to both white women and men.⁵

As much as the pandemic has suppressed women’s opportunities in the job market, the nation’s economic recovery will largely depend on women getting back into the workforce and improving their financial footing. According to the Institute for Women’s Policy Research, closing the gender pay gap could add $512.6 billion to America’s economy moving forward.⁶

Improving financial prospects for people of color could add even more to that economic growth. Following on the heels of recent protests calling for systemic reform of racial disparities in the U.S., one banker suggests that increasing mortgages and small-business loans to people of color would help them build equity, start new businesses and contribute to the growth of capital markets.⁷

¹ Julia Boorstin and Harriet Taylor. CNBC. July 15, 2020. “How coronavirus could do real, long-term damage to women’s careers.” https://www.cnbc.com/2020/07/14/how-coronavirus-could-do-long-term-damage-to-womens-careers.html. Accessed July 20, 2020.

² Robin Bleiweis. Center For American Progress. March 24, 2020. “Quick Facts About the Gender Wage Gap.” https://www.americanprogress.org/issues/women/reports/2020/03/24/482141/quick-facts-gender-wage-gap/. Accessed July 20, 2020.

³ Kathleen Elkins. CNBC. July 18, 2020. “Here’s how much men and women earn at every age.” https://www.cnbc.com/2020/07/18/heres-how-much-men-and-women-earn-at-every-age.html. Accessed July 20, 2020.

⁴ Tyler Bond, Joelle Saad-Lessler and Christian E. Weller. National Institute on Retirement Security. May 2020. “Still Shortchanged.” https://www.nirsonline.org/wp-content/uploads/2020/04/Still-Shortchanged-Final.pdf. Accessed July 20, 2020.

⁵ Jessica Stender. Ms Magazine. July 19, 2020. “How Salary History Bans Help Combat the Race and Gender Pay Gap.” https://msmagazine.com/2020/07/19/salary-history-bans-help-combat-the-race-and-gender-pay-gap/. Accessed July 20, 2020.

⁶ Elizabeth Schulze. CNBC. March 8, 2018. “Closing the gender pay gap could have big economic benefits.” https://www.cnbc.com/2018/03/08/closing-the-gender-pay-gap-could-have-big-economic-benefits.html. Accessed July 20, 2020.

⁷ Allissa Kline. American Banker. July 12, 2020. “How banks aim to close racial wealth gap: More minorities in leadership.” https://www.americanbanker.com/news/how-banks-aim-to-close-racial-wealth-gap-more-minorities-in-leadership. Accessed July 20, 2020.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.