Retirees Should Have Spending Plans

Every day, articles appear urging people to save for retirement. These articles are so prevalent that it may seem like retirement planning is entirely about getting people to save.

Actually, retirement planning concerns much more than that. It has another aspect well worth discussing: the eventual spending of all of that money that has been accumulated.

Too few Americans coordinate their retirement spending. Earlier this year, a respected financial institution asked more than 1,300 savers aged 55-75 if they had a drawdown strategy in mind for the future. Nearly two-thirds of the pre-retirees surveyed did not. A third of the retired respondents to the survey also lacked spending plans.

In retirement, inattention to household spending can have serious consequences. A newly retired couple can travel too much, eat out too frequently, and live it up to such a degree that its savings can be drawn down abruptly. That danger is heightened if a couple’s investments start to perform poorly. A spending plan may help retirees guard against this kind of crisis.

Another case occurs when a retiree household becomes overconfident in its mediocre performing portfolio and a savings account constructed with average or below average savings accumulations.  A decade or so into retirement without a spending plan, that household finds its investment and bank accounts dwindling mysteriously fast. Sunday brunches give way to $3.99 bacon-and-egg specials, and the golf clubs stay in the garage all year. A plan for drawing down retirement savings in moderation when retirement starts might help such a couple maintain its quality of life longer.

There is no standardized retirement drawdown strategy; one size does not fit all. Each retired household (and its retirement planner) must arrive at one specific to its savings, investment mix, income requirements, and age.

There are some basic principles, however, that may help in configuring the spending plan. It makes sense for many retirees to tap their taxable brokerage accounts as a first step in a drawdown strategy. This allows assets held within tax-advantaged retirement accounts (such as IRAs) more time to grow and compound. By doing this, a retiree can effectively realize a tax break – money coming out of a traditional IRA is taxed as regular income, whereas long-term capital gains are taxed between zero and 20%.

Of course, Roth IRA withdrawals are never taxed, provided you have followed IRS rules. That brings up another factor in planning retirement spending – what can be done with regard to asset location and tax efficiency before retirement.

A retiree with a larger traditional IRA may want to consider a Roth conversion of some or all of those IRA assets before age 70. In the fifties or sixties, an IRA owner may be at or near peak earnings, so handling the tax bite that comes with such a conversion may be comparatively easier than it would be during retirement.

Another tactic is to take earlier, voluntary withdrawals from accounts that would demand Required Minimum Withdrawals (RMDs) beginning at age 70½. These voluntary withdrawals, which would occur before the start of RMDs, would leave an IRA owner with lower RMDs (and less taxable income) in the future.

Retirement spending should never be treated casually. A spending strategy may play a crucial role in preserving a retired household’s quality of life. If you wish to review or establish and “spending strategy”, please contact us.

Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.

Aiken, SC 29803



Social Security: Myths vs. Facts

Some myths & misperceptions keep circulating about Social Security. These are worth dispelling, as more and more baby boomers are becoming eligible for their retirement benefits.

Myth #1: Social Security will go away before you do. The federal government has announced that Social Security may become insolvent between 2033 and 2037 if no action is taken – but it is practically a given that Congress will act on the program’s behalf. Social Security provides 40% of the total income of the 40 million Americans receiving retirement benefits.

Did you know that Social Security has had a surplus each year since 1984? That situation is about to change. By about 2020, the program is projected to face a deficit, which it will tap incoming interest payments to offset. It will only be able to use that tactic until the mid-2030’s. The program will not “run dry” or go bankrupt at that point, but by some estimates, its payments to retirees could become about 25% smaller.

Myth #2: Your Social Security benefits are “your” money. It would be a fitting reward if your Social Security income represented the return of all the payroll taxes you had paid through the years. Unfortunately, that is not the case. The payroll taxes you paid decades ago funded the Social Security benefits that went to retirees at that time. Your Social Security benefits will be funded by the payroll taxes that a younger generation pays.

Myth #3: Social Security income is tax-free. In reality, up to 85% of your Social Security income may be taxed. Social Security uses a formula to determine the taxable amount, which is as follows: adjusted gross income + nontaxable interest + one-half of your Social Security benefit = your combined income. Single filers with combined incomes between $25,000-$34,000, and joint filers with combined incomes between $32,000-$44,000, may have as much as 50% of their benefits taxed. Single filers with combined incomes above $34,000, and joint filers with combined incomes above $44,000, may have up to 85% of their benefits subject to taxation.

Myth #4: If you have never worked, you will never get Social Security benefits. This is not necessarily true.

Generally speaking, you have to work at least ten years to become eligible for Social Security income. That is, you have to spend ten or more years at jobs in which you pay Social Security taxes; you have to pay into the system to get something back from the system. Unfortunately, care-giving and child-rearing do not qualify you for Social Security.

To get technical about it, you must accumulate 40 “credits” to become eligible for benefits. When you receive $1,260 in earned income, you get one credit. Another $1,260 in earned income brings you another credit, and so forth. You can receive up to four credits per year. Most people will collect their 40 credits in a decade; though others will take longer.

If you have never worked, or worked for less than 10 years, you could still qualify for Social Security on the earnings record of your spouse, your ex-spouse, or your late spouse. A widow can choose to collect up to 100% of a deceased spouse’s monthly benefit; a married spouse can collect up to 50% of the other spouse’s monthly benefit. If you have divorced, you may still file for Social Security benefits based on your ex-spouse’s earnings record – provided that the marriage lasted ten years or longer and you have not married again.


Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.

Aiken, SC 29803



Is This the Time to Change Jobs?


Switching from one job to another can literally pay off. Data from payroll processing giant ADP confirms that statement. In the first quarter of this year, the average job hopper realized a 6% pay boost. The salary increase averaged 11% for workers younger than 25.

 A recent LinkedIn study found that Generation Y is making job switching something of a habit: on average, millennials will change jobs four times from age 22-32. This compares to an average of two job moves in the first decade out of college for Generation X.

As you change jobs at any age, you need to take care of a few things during the transition. On your way to (presumably) higher pay, be sure you address these matters.

How quickly can you arrange health coverage? If you already pay for your own health insurance, this will not be an issue. If you had coverage at your old job and now need to find your own, fall is the prime time to start shopping for it. Open enrollment season at the Health Insurance Marketplace runs from November 1 to January 31. If you enroll in a plan by December 15, 2016, your coverage will begin on January 1, 2017.

If you were enrolled in an employer-sponsored health plan, you need to find out when the coverage from your previous job ends – and, if applicable, when coverage under your new employer’s health plan begins. If the interval between jobs is prolonged, and COBRA will not cover you for the entirety of it, you may want to check whether you can obtain coverage from your alumni association, your guild or union, or AARP. If you are leaving a career to start a business, confer with an insurance professional to search for a good group health plan.

What happens with your retirement savings? You likely have four options regarding the money you have saved up in your workplace retirement plan: you can leave the money in the plan, roll it over into an IRA, transfer the assets into the retirement plan at your new job (if the new employer allows), or cash out (the withdrawal will be taxed and you may be hit with an early withdrawal penalty as well).

You will want to see how quickly you can start saving and investing through your new employer’s retirement program, whether you are able to transfer assets from the old plan into the new one or not. If the company offers a match, when will it apply?

Can you manage your cash flow effectively between one job & the next? You do not want to tap your emergency fund or your retirement accounts for cash during the transition, so do the little things to guard against that possibility. Postpone big purchases, avoid running up large credit card debts you will regret later, eat in rather than out, and buy what you really need rather than what you merely want. See if you can put off most of your holiday spending until late November. A cash flow worksheet (which can be found online, for free) can help you track your essential and discretionary household spending.

Each year, about 20 million Americans move on to a new job. If you will soon join their ranks, make sure that you keep household money and insurance matters top of mind, and strive to keep saving for your future at your new workplace.

Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.

Aiken, SC 29803



What Expenses Could Change When You Retire?

Your retirement may seem near at hand or far away, but one thing is certain: your future will differ from your present.

Financially, that fact is worth remembering. Some of the costs you have paid regularly all these years may suddenly decrease or fade away. Others may increase.

Will your insurance costs rise with age? Maybe not. You may find that your overall insurance expenses decline. Yes, health insurance becomes more expensive the older you get – but those premiums are merely part of the bigger insurance coverage picture. If you stop working in retirement, you have no need for disability insurance. You might have little need for life insurance, for that matter. You may have paid off your home and other major debts, and rather than drawing income from work, you will be drawing it from investments and Social Security.

You can expect your medical expenses to increase. By how much, exactly? That will vary per household, but perhaps you have read some of the latest estimates. This summer, Fidelity Investments said that a 65-year-old couple retiring today will need around $260,000 to cover future health care costs. This estimate assumes they live 20-22 years after they retire. Long-term care coverage was not included in that projection; Fidelity projects that a policy providing three years of care at $8,000 a month would cost the same couple an extra $130,000.

How about your income taxes? If you live on 70-80% of your end salary in retirement – which is not unusual – then you may find yourself in a lower income tax bracket. Yes, your Social Security income may be taxed – but, even in the worst-case scenario, no more than 85% of it will be.

If you have invested using a Roth IRA, you will be looking at some tax-free retirement income – provided, of course, you have owned the IRA for at least five years and are older than 59½ when you start making withdrawals. While a Roth account held in a workplace retirement plan requires withdrawals beginning at age 70½, the withdrawals will still be tax-free if you follow IRS rules.

Will your housing costs fall? Over the long term, they may. Some retirees own their homes free and clear and others nearly do. Homeowner association fees and property taxes must still be paid, so, while that mortgage balance may be gone or nearly gone, other recurring costs will remain.

Homes inevitably need repairs, so, in some random year, you may find your housing costs jumping. Downsizing and moving into a smaller home can also mean a short-term rise in your housing expenses. If you do downsize and move, you will hopefully relocate to an area where housing costs are lower.

Will you face education costs? You may have retired your own college debt, but if you have children forty or fifty years younger than you are, you could risk retiring with some of their student loan debt on your hands. That expense could linger into your retirement – a valid reason to reject assuming it in the first place.

One “cost” may disappear, leaving you with a little more money each month. Once retired, your constant per-paycheck need to save for retirement vanishes. So if you are assigning 10% or 20% of your paychecks to your retirement accounts, you may be pleasantly surprised to find that money back in your wallet (so to speak) after you transition into your “second act.”

Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.

Aiken, SC 29803



Characteristics of the Millionaires Next Door

Just how many millionaires does America have? By the latest estimation of Spectrem Group, a research firm studying affluent and high net worth investors, it has more than ever before. In 2015, the U.S. had 10.4 million households with assets of $1 million or greater, aside from their homes. That represents a 3% increase from 2014. Impressively, 1.2 million of those households were worth between $5 million and $25 million.


How did these people become rich? Did they come from money? In most cases, the answer is no. The 2016 edition of U.S. Trust’s Insights on Wealth and Worth survey shares characteristics of nearly 700 Americans with $3 million or more in investable assets. Seventy-seven percent of the survey respondents reported growing up in middle class or working class households. A slight majority (52%) said that the bulk of their wealth came from earned income; 32% credited investing.


It appears most of these individuals benefited not from silver spoons in their mouths, but from taking a particular outlook on life and following sound financial principles. U.S. Trust asked these multi-millionaires to state the three values that were most emphasized to them by their parents. The top answers? Educational achievement, financial discipline, and the importance of working.


Is education the first step toward wealth? There may be a strong correlation. Ninety percent of those polled in a recent BMO Private Bank millionaire survey said that they had earned college degrees. (The National Center for Education Statistics notes that in 2015, only 36% of Americans aged 25-29 were college graduates.)


Interestingly, a lasting marriage may also help. Studies from Ohio State University and the National Bureau of Economic Research (NBER) both conclude that married people end up economically better off by the time they retire than singles who have never married. In fact, NBER finds that, on average, married people will have ten times the assets of single people by the start of retirement. Divorce, on the other hand, often wrecks finances. The OSU study found that the average divorced person loses 77% of the wealth he or she had while married.


Most of the multi-millionaires in the U.S. Trust study got off to an early start. On average, they began saving money at 14; held their first job at 15; and invested in equities by the time they were 25.


Most of them have invested conventionally. Eighty-three percent of those polled by U.S. Trust credited buy-and-hold investment strategies for part of their wealth. Eighty-nine percent reported that equities and debt instruments had generated most of their portfolio gains.


Many of these millionaires keep a close eye on taxes & risk. Fifty-five percent agreed with the statement that it is “more important to minimize the impact of taxes when making investment decisions than it is to pursue the highest possible returns regardless of the tax consequences.” In a similar vein, 60% said that lessening their risk exposure is important, even if they end up with less yield as a consequence.


Are these people mostly entrepreneurs? No. The aforementioned Spectrem Group survey found that millionaires and multi-millionaires come from all kinds of career fields. The most commonly cited occupations? Manager (16%), professional (15%), and educator (13%). 


Here is one last detail that is certainly worth noting. According to Spectrem Group, 78% of millionaires turn to financial professionals for help managing their investments.


What Will the Election Do to the Market?

Wall Street has had a rather calm summer. How about fall? Will volatility increase before and after Election Day?


So far, the market is performing roughly in line with historical patterns. In 19 of the prior 22 presidential election years, the S&P 500 advanced from June through October. The median gain for the index during that 5-month period: 4.1%.


During those 22 election years, the S&P averaged a gain of 1.5% in June, 1.9% in July, and 3.0% in August. This year, the S&P rose 0.1% in June and rallied 3.6% in July; it is up slightly for the month as August draws to a close. An August gain would represent its sixth straight monthly advance.


In past election years, July & August have been the most volatile months. The yearly standard deviation for the S&P averaged 18.6% during the past 22 election years, but volatility averaged 28.8% in July and 30.3% in August of those 22 years. (These July and August numbers, however, are a bit distorted as a result of the wild market turbulence of 1932. In that year, the S&P gained 55.7%.)


Whoever wins the election, the status quo will likely remain on Capitol Hill. As a Morgan Stanley report commented in July, “Current evidence suggests the U.S. elections in November won’t yield outcomes that substantially change market fundamentals.” Morgan Stanley analysts foresee Clinton winning the election and Republicans retaining their majority in the House of Representatives. In that scenario, Clinton wins, but her administration has difficulty enacting any of its planned reforms.


If the Republicans lose control of the House or Trump wins, Wall Street could see some pronounced short-term volatility, which is also an outcome that could possibly affect market fundamentals. Even if one candidate or the other wins by a landslide, their most ambitious proposals may never get off the ground. As Morgan Stanley asserts, “attempts by Clinton or Trump to exercise transformative power domestically will be stunted” by a lack of support in Congress.


Should stocks rollercoaster before or after Election Day, keep calm. Any disturbance may be short-term, and your investing and retirement saving effort is decidedly long-term. The election is a big event, but earnings, central bank monetary policy, and macroeconomic factors may have a much bigger impact on the markets this fall.


Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.; Aiken, SC 29803

O-803-644-0701 / C-803-439-3663

Retirement Planning is Not All About Money Before Retirement, Plan Your Retirement Lifestyle

How many words have been written about retirement? It’s a preoccupation for many, and we devote so much time, thought, and energy toward saving for the last day we go to work. Saving and investing in such a way that we no longer have to work may seem ideal at first, but it raises a question: what do you have planned for all of that free time?


What do you do with your first day? Maybe you finally take that big vacation you’ve been talking about. Or, perhaps, it’s time to catch up with your kids, grandkids, and other extended family. But, eventually, you come home from a vacation or a visit.


While many of us have that first day mapped out, it’s the days that follow that we haven’t really considered. In a survey conducted by Merrill Lynch and AgeWave, people who were about to retire were asked “what they would miss the most” once they left the working world. A “reliable income” was the top answer, coming in at 38%.


When the same survey was given to people who have been retired for a while, “reliable income” was still a popular answer, but it drops down to 29%. So, what are actual retirees missing? The top answer, at 34%, was “social connections.” Other prominent answers included “having purpose and work goals” (19%) and “mental stimulation” (12%).


Free time can be a luxury or a curse. The results of the survey indicate that many retirees don’t give much thought to what they will be doing with all of their free time. We are meant to enjoy our retirement, of course, so banishing the restlessness and loneliness that can come from leaving your job should be taken into consideration when you are planning.


In his book You Can Retire Earlier Than You Think, investment strategist and radio host Wes Moss advises seeking out what he calls “core pursuits.” These are rewarding and engaging interests that can bring satisfaction and happiness to your life; charity work, hobbies, community activities, spending more time with your spouse, exercise, golf, fishing, boating, hunting or public service are but a few examples. Moss estimates that the most satisfied retirees enjoy three or four such pursuits as they go into retirement – though, there’s no reason that someone can’t find more ways to pass the time.
“Retirement” doesn’t mean “not working.” Not everyone is geared toward making their life about core pursuits. You may find that you miss working, or that you simply need or desire a little more income. Maybe you find that a part-time job is ideal for supplementing your retirement income? Or, perhaps, you have an idea for a small business that you’ve always wanted to pursue?

Whatever path you take, it’s important to consider the options open to you once your timely your own. You’ve worked most of your life for it, so enjoying yourself during retirement should be a priority.


Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

910 Dougherty Rd.

Aiken, SC 29803




Stocks & Presidential Elections What does history tell us – and should we value it?

Provided by Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

July, 2016


As an investor, you know that past performance is no guarantee of future success. Expanding that truth, history has no bearing on the future of Wall Street.


That said, stock market historians have repeatedly analyzed market behavior in presidential election years, and what stocks do when different parties hold the reins of power in Washington. They have noticed some interesting patterns through the years, which may or may not prove true for 2016.


Do stocks really go through an “election cycle” every four years? The numbers really don’t point to any kind of pattern. (Some analysts contend that stocks follow a common pattern during an election year; more about that in a bit.)


In price return terms, the S&P 500 has gained an average of 6.1% in election years, going back to 1948, compared to 8.8% in any given year. The index has posted a yearly gain in 76% of presidential election years starting in 1948, however, as opposed to 71% in other years. Of course, much of this performance could be chalked up to macroeconomic factors having nothing to do with a presidential race.


Overall, election years have been decent for the blue chips. Opening a very wide historical window, the Dow has averaged nearly a 6% gain in election years since 1833. Across that same time frame, it has averaged a 10.4% gain in “year three” – years preceding election years.


Many election years have seen solid advances for the small caps. The average price return of the Russell 2000 is 10.9% in election years going back to 1980, with a yearly gain occurring 78% of the time.


Do stocks respond if a particular party has control of Congress? A little data from InvesTech Research will help to answer that.


InvesTech studied S&P 500 yearly returns since 1928 and found that the S&P returned an average of 16.9% in the two years after a presidential election when the White House and Congress were controlled by the same party. In the 2-year stretches after a presidential election, when Congress was controlled by the party that didn’t occupy the White House, the price return of the S&P averaged 15.6%. When control of Congress was split – regardless of who was President – the S&P only returned an average of 5.5% in those 2-year periods.


Could stock market performance actually influence the election? An InvesTech analysis seems to draw a correlation, however mysterious, between S&P 500 performance and whether the incumbent party retains control of the White House.


There have been 22 presidential elections since 1928. In those 22 years, the incumbent party won the White House 86% of the time when the S&P advanced during the three months preceding Election Day. When the S&P lost ground in the three months prior to the election, the incumbent party lost the White House 88% of the time. Of course, other factors may have been considerably more influential in these elections, such as a given president’s approval rating and the unemployment rate.


Annual returns aside, is there a mini-cycle that hits stocks in the typical election year? Some analysts insist so, with the cycle unfolding like this: stocks gain momentum during primary season, rally strongly as the presumptive nominees appear and party conventions occur, and then go sideways or south in November and December.


There might be something to this assertion, at least in terms of S&P 500 performance. A FactSet/Wall Street Journal analysis shows that, in election years starting in 1980, the S&P has advanced an average of 4.9% in the period between when a presumptive nominee is declared and Election Day. After Election Day in these nine years, it declined about half a percent on average.


How much weight does history ultimately hold? Perhaps not much. It is intriguing, and some analysts would instruct you to pay more attention to it rather than less. Historical “norms” are easily upended, though. Take 2008, the election year that brought us a bear market disaster. The year 2000 also brought an S&P 500 loss. While a presidential election undoubtedly affects Wall Street every four years, it is just one of many factors in determining a year’s market performance.


I hope this journey through the Financial/Election Year cycles has given you some historical references; however, it is not a crystal ball.  My general sense is that we should not place “big bets” nor rack our chips off the table.  If you wish to discuss this or any other issues, please call me at 803-644-0701 or e: mail at

Provided by Bill Coscioni, CFP®, CPA

WealthCare/Financial Planners, LLC

July, 2016



Good Retirement Savings Habits Before Age 40

You know you should start saving for retirement before you turn 40. What can you start doing today to make that effort more productive, to improve your chances of ending up with more retirement money, rather than less?


Structure your budget with the future in mind. Live within your means and assign a portion of what you earn to retirement savings. How much? Well, any percentage is better than nothing – but, ideally, you pour 10% or more of what you earn into your retirement fund. If that seems excessive, consider this: you are at risk of living 25-30% of your lifetime with no paycheck except for Social Security.


Saving and investing 10-15% of what you earn for retirement can really make an impact over time. For example, say you set aside $4,000 for retirement in your thirtieth year, in an investment account that earns a consistent (albeit hypothetical) 6% a year. Even if you never made a contribution to that retirement account again, that $4,000 would grow to $30,744 by age 65. If you supplant that initial $4,000 with monthly contributions of $400, that retirement fund mushrooms to $565,631 at 65.


Avoid cashing out workplace retirement plan accounts. Learn from the terrible retirement saving mistake too many baby boomers and Gen Xers have made. It may be tempting to just take the cash when you leave a job, especially when the account balance is small. Resist the temptation. One recent study (conducted by behavioral finance analytics firm Boston Research Technologies) found that 53% of baby boomers who had drained a workplace retirement plan account regretted their decision. So did 46% of the Gen Xers who had cashed out.


Instead, arrange a rollover of that money to an IRA, or to your new employer’s retirement plan if that employer allows. That way, the money can stay invested and retain the opportunity for growth. If the money loses that opportunity, you will pay an opportunity cost when it comes to retirement savings. As an example, say you cash out a $5,000 balance in a retirement plan when you are 25. If that $5,000 stays invested and yields 5% interest a year, it becomes $35,200 some 40 years later. So today’s $5,000 retirement account drawdown could amount to robbing yourself of $35,000 (or more) for retirement.


Save enough to get a match. Some employers will match your retirement contributions to some degree. You may have to work at least 2-3 years for an employer for this to apply, but the match may be offered to you sooner than that. The match is often 50 cents for every dollar the employee puts into the account, up to 6% of his or her salary. With the exception of an inheritance, an employer match is the closest thing to free money you will ever see as you save for the future. That is why you should strive to save at a level to get it, if at all possible.


Saving enough to get the match in your workplace retirement plan may make your overall retirement savings effort a bit easier. Say your goal is to save 10% of your income for retirement. If the employer match is 50 cents to the dollar and you direct 6% of your income into that savings plan, your employer contributes the equivalent of 3% of your income. You are almost to that 10% goal right there.


Think about going Roth. The younger you are, the more attractive Roth retirement accounts (such as Roth IRAs) may look. The downside of a Roth account? Contributions are not tax-deductible. On the other hand, there is plenty of upside. You get tax-deferred growth of the invested assets, you may withdraw account contributions tax-free, and you get to withdraw account earnings tax-free once you are 59½ or older and have owned the account for at least five years. Having a tax-free retirement fund is pretty nice.


To have a Roth IRA in 2016, your modified adjusted gross income must be less than $132,000 (single taxpayer) or $194,000 (married and filing taxes jointly).4


Set it & forget it. Saving consistently becomes easier when you have an automated direct deposit or salary deferral arrangement set up for you. You can gradually increase the monthly amount that goes into your accounts with time, as you earn more.


Invest for growth. Much wealth has been built through long-term investment in equities. Wall Street has good years and bad years, but the good years have outnumbered the bad. Early investment in equities may assist your retirement savings effort more than any other factor, except time.


Time is of the essence. Start saving and investing for retirement today, and you may find yourself way ahead of your peers financially by the time you reach 40 or 50.



I wanted to communicate my thoughts and observations regarding the British vote to exit the European Union and its potential effect on your investment assets.   Friday morning witnessed the initial effect of short-selling traders attempting to guess the effect on the market post-the-vote as the Dow dropped 450 points at the opening.  The market really did little after the opening; however it did slide an additional 200 points late in the final trading hour.  I suspect some traders did not want to keep positions over the weekend; therefore they closed positions quickly near the end of the trading session and drew the market down another 0.5%.  In the short term you should expect continued volatility because the market does not like uncertainty.  As the days pass and the “blame-game, etc., etc.”  news being reported ceases to hold the interest of the general public; this story will move from the front page to a by-line.  To overstate the obvious, this marriage was 40+ years in the making and it will take quite some time to unwind (possibly up to 2 years).  The internals are very complex and very financially unique; therefore, the media will not be able to truly understand the concepts nor will they be able to clearly articulate to the public who will be less receptive then the media.  Ultimately Brexit should slowly dissolve into “an historic event that no one can predict the final outcome”.


Now, how will this impact your investments?  If you reviewed your brokerage account(s); you will notice that I did not buy nor sell any securities in anticipation of the vote.  My view was that regardless of the outcome, the near term effect would not be significant and there was a much greater risk to your investment trying to “time the market”; therefore I felt that our asset allocation (i.e. very light on International securities) was such that it would weather the storm and we would participate on the up-swing when the dust settles.


I will be happy to chat with you in greater detail at any time,  please give me a call at your convenience.