{"id":586,"date":"2021-06-21T00:00:00","date_gmt":"2021-06-21T00:00:00","guid":{"rendered":"https:\/\/www.retirementrefined.com\/index.php\/2021\/06\/21\/tough-week-for-the-market-fed-roth-conversions-portfolio-rebalancing\/"},"modified":"2021-06-21T00:00:00","modified_gmt":"2021-06-21T00:00:00","slug":"tough-week-for-the-market-fed-roth-conversions-portfolio-rebalancing","status":"publish","type":"post","link":"https:\/\/www.retirementrefined.com\/tough-week-for-the-market-fed-roth-conversions-portfolio-rebalancing","title":{"rendered":"Tough Week for the Market (Fed) \/ Roth Conversions \/ Portfolio Rebalancing"},"content":{"rendered":"

From the depths of the pandemic until now<\/strong>, the markets<\/strong> have been cruising along<\/strong> melting higher and higher.\u00a0 The recent all-time high<\/strong> for the S&P 500 was 4257<\/strong>.\u00a0 The recent highs for the Dow<\/strong> and Nasdaq<\/strong> were 35,091<\/strong> and 14,211<\/strong> respectively.<\/p>\n

Rock-bottom interest rates, economic stimulus and the Fed have pushed us successfully through the pandemic, so far.\u00a0 Now, the Federal Reserve has a huge challenge<\/strong>!<\/p>\n

How does the Fed normalize monetary policy, contain any real inflationary pressures, and not tank the markets?\u00a0 I wish I knew the answer!! \"\"<\/em><\/strong><\/p>\n

Last week, the Fed announced one minor change<\/strong> to the current massive monetary accommodation.\u00a0 The Fed said they may begin to increase the \u201cdiscount rate\u201d in 2023 instead of 2024.<\/strong>\u00a0 Then on Friday morning<\/strong>, as I was driving for an hour or so, I was listening to CNBC as they were interviewing James Bullard of our Federal Reserve<\/strong>.\u00a0 Mr. Bullard offered excellent insight to how the Fed is thinking and what the course of action could be if inflation runs hotter than thought.\u00a0 By the time the interview was over<\/strong>, the Dow Jones Futures were down over 500<\/strong> points prior to the market opening, which led to the negative week for the markets.<\/p>\n

For the week<\/strong> the Dow<\/strong> dropped (3.40%), the S&P 500<\/strong> (1.87%), the Nasdaq Composite<\/strong> (.26%) and the Russell 2000<\/strong> (4.17%).\u00a0 Over the pond didn\u2019t fare well either, as foreign stocks<\/strong> lost (2.40%) and Emerging Markets<\/strong> dropped (1.44%).<\/p>\n

The 10 Year US Treasury yield actually dropped<\/strong> in spite of the talk of inflation and rates increasing.\u00a0 As of Friday, yield closed at 1.48%.\u00a0 Interestingly short-term rates, such as the 2-Year Us Treasury yield has over doubled from December 31st<\/sup> 2020, from a yield of .12% to .26%.<\/strong><\/p>\n

Roth Conversions<\/strong><\/p>\n

\"\"Now is the time to begin thinking about doing Roth Conversions in 2021<\/strong>.\u00a0 With the year just about \u00bd way in the rear-view mirror, you may have a pretty good idea of how much income you\u2019ll receive in 2021 for tax purposes.\u00a0 Our guidance is to begin examining your options over the next few months and if doing conversions makes sense, to do so in the 4th<\/sup> quarter.<\/p>\n

There are several planning situations where conversions can be beneficial<\/strong>.\u00a0 One of the best ways to determine if there is benefit, is to have your advisor do an analysis modeling your options.\u00a0 An experienced retirement income planner will typically have software that will model various conversion options to assist you in making a sound decision.<\/p>\n

Portfolio Rebalancing\u00a0\u00a0\u00a0 <\/strong><\/p>\n

Those approaching retirement or currently retired<\/strong>, should monitor their overall asset allocation, as well as diversification.\u00a0 If you find your portfolio has a much larger % of stocks than your target, it probably is a great time to rebalance.<\/strong><\/p>\n

You may also want to closely examine the bond holdings<\/strong> within your portfolio.\u00a0 Up until January of this year, US Treasuries performed very well, as rates continually dropped, pushing values higher.\u00a0 Going forward, it makes senses that your bond allocation is properly diversified between different types of bonds and maturities.\u00a0 Especially if inflation runs much hotter than the Fed initially forecast!!!<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

From the depths of the pandemic until now, the markets have been cruising along melting higher and higher.\u00a0 The recent all-time high for the S&P 500 was 4257.\u00a0 The recent highs for the Dow and Nasdaq were 35,091 and 14,211 respectively. Rock-bottom interest rates, economic stimulus and the Fed have pushed us successfully through the […]<\/p>\n","protected":false},"author":3,"featured_media":587,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","compliance_id":"","post_disclaimer":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/586"}],"collection":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/comments?post=586"}],"version-history":[{"count":0,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/586\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media\/587"}],"wp:attachment":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media?parent=586"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/categories?post=586"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/tags?post=586"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}