Market Update | Third Quarter 2024

Tensions in the Middle East have raised concerns of a major regional war. The conflict, which began with a Hamas attack on Israel a year ago, escalated with the killing of Hamas’s political chief in Tehran and recent airstrikes on Lebanon and Israel. Despite the humanitarian crisis, financial markets have been minimally affected so far. The main risk is from rising oil prices, though production hasn’t been impacted yet, and China’s softening demand has had a larger effect. Israel's tech-driven economy remains resilient, while other regional economies are too small to affect global growth significantly.

MARKET UPDATE | FIRST QUARTER 2024

A Quick Glance At Health Savings Accounts

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The Significance and Tax Advantages of Reaching Age 65

In 1935, President Franklin D. Roosevelt established the U.S. Social Security system and designated age 65 as the retirement age. Since then, it’s become the typical age to quit working, kick back, and enjoy the fruits of your labor. To provide additional support to those over age 65, our government also offers tax breaks to older Americans. This article summarizes a few of the most important.

2023 Tax-Planning Strategies to Consider Before Year End

As we approach the end of the calendar year, there is still time to implement tax-planning strategies that can help you minimize your tax burden in 2023 and/or longer term. This article provides an overview of potential options that you can discuss with your TMG wealth advisor.

How To Make Federal Tax Payments Online

At The Mather Group, LLC (TMG), we encourage our clients make all federal tax payments online via the direct-pay function on the Internal Revenue Service (IRS) website. This article explains why and provides the link and instructions for how to do so.

The Benefits of Tax-Loss Harvesting

As the end of the year approaches, you are likely thinking of plans for the upcoming holidays and new year. We encourage you to also be thinking about year-end tax strategies that could potentially reduce your overall tax liability. One possible strategy to consider is a tax-mitigation strategy known as tax-loss harvesting.

Tax-Planning Strategies to Consider Before Year End

As we approach the end of the calendar year, there is still time to implement tax-planning strategies that can help you minimize your tax burden in 2022 and/or longer term. This article provides an overview of potential options that our wealth advisors at The Mather Group, LLC (TMG) are available to discuss.

Continued Commentary on House Ways & Means Committee Revenue Proposals

Congress and the new administration continue to pursue new avenues to collect additional tax revenue through various changes to the Internal Revenue Code to pay for the proposed infrastructure bills. The analysis below focuses on the proposals from the House Ways & Means Committee that were released on September 13, 2021. It is important to note that these remain proposals, and the final bill, if signed into law, could be different. The Mather Group, LLC (TMG) continues to monitor these proposals and will keep clients abreast of those most likely to impact them.

Commentary on the Administration's Fiscal Year 2022 Revenue Proposals

Current proposals suggest tax rates will increase for high income taxpayers. In the spirit of reaching an agreement, initial proposals are a wish list likely to change before being finalized, but our goal is to keep you - as our client - abreast on those proposals as we continue to work with your family to review planning opportunities related to your portfolio and estate. The success of this communication lies not in predicting the final changes, but instead in prompting productive conversations with your team here in advance of tax changes being enacted. To discuss how potential changes may affect your individual case, please reach out to a member of your team.

Know The 1099 Reporting Rules

1099-MISC reporting rules can be confusing. Learn the filing requirements, exceptions, as well as some quick tips to make filing easier.

After the Storm: How Do I Claim a Casualty Loss?

Angelique Lund, JD, CPA

Market Update | Third Quarter 2024

Tensions in the Middle East have raised concerns of a major regional war. The conflict, which began with a Hamas attack on Israel a year ago, escalated with the killing of Hamas's political chief in Tehran and recent airstrikes on Lebanon and Israel. Despite the humanitarian crisis, financial markets have been minimally affected so far. The main risk is from rising oil prices, though production hasn't been impacted yet, and China's softening demand has had a larger effect. Israel's tech-driven economy remains resilient, while other regional economies are too small to affect global growth significantly.

Third Quarter 2024 Market Returns: S&P 500 Sectors & Asset Classes

In today's dynamic market, the factors driving returns are ever-changing. Our latest analysis underscores the value of a well-diversified portfolio by highlighting recent performance trends across S&P 500 sectors and asset classes. Explore the charts below to gain deeper insights into these trends and optimize your investment strategy with our expert guidance.

Market Update | Second Quarter 2024

In the evolving economic landscape of 2024, the impact of inflation and robust growth has shaped market expectations, recalibrating anticipated Fed rate cuts and intensifying focus on the upcoming November election. Amidst varied economic data, including moderated inflation and mixed sectoral performance, investors are cautiously optimistic but mindful of lingering uncertainties.

Second Quarter 2024 Market Returns: S&P 500 Sectors & Asset Classes

Evolving US Global Trade Dynamics

When China joined the World Trade Organization (WTO) in December 2001, it agreed to allow foreign investment in, among other sectors, banking, financial services, insurance and telecommunications. China entered the domain of international trade, agreeing to abide by trade regulations and polices which it had not shaped.

MARKET UPDATE | FIRST QUARTER 2024

Investors continue to be rewarded for holding higher risk assets as economic growth remains strong, consumer spending remains strong, and corporate profit growth is robust. Both U.S. and international equities posted strong gains in the quarter and riskier parts of the bond market led the way. Despite the enthusiasm, there are a few clouds on the horizon. Inflation has remained more persistent than expected and consumer confidence is moderating in the face of higher interest rates and an upcoming election. Over the long-term, the growing federal debt will likely slow economic growth and annual budget deficits will need to be brought to sustainable levels. "A national debt, if it is not excessive, will be to us a national blessing; it will be a powerful cement of our Union. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry." Alexander Hamilton

Active Management Vs. Index-Based Investing: An Update on Performance

S&P released their annual SPIVA (S&P Indices Vs. Active) U.S. Scorecard, measuring the performance of actively managed equity funds versus an equivalent index benchmark. Here at The Mather Group, LLC (TMG), SPIVA is one of the many studies that we use to continually evaluate our evidence-based investment strategy. The data typically shows similar outcomes on a yearly basis, and 2023 was no exception, as 60% of active U.S. Large Cap Equity funds underperformed the S&P 500.1 This tracks closely against the 64% average of funds underperforming over a 12 month basis, during the 23 years of data that S&P tracks.

First Quarter 2024 Market Returns: S&P 500 Sectors & Asset Classes

The below charts visually demonstrate that the drivers of return are constantly changing each year, which emphasizes the importance of a well-diversified portfolio. In this article, we provide a snapshot of recent S&P 500 sector and asset class performance.

Retirement Funding Outlook: Perspectives on the “Silver Tsunami”

In this report, The Mather Group LLC (TMG) will evaluate this demographic outlook; potential retirement funding sources for a growing cohort of seniors; and public policy challenges to the Social Security program.

2024 Inflationary Outlook: Relief at Last?

In this report, The Mather Group, LLC (TMG) will review significant causes of this recent inflationary spike; key factors contributing to its welcomed decline; and offer an outlook for the balance of 2024.

2024 Residential Housing Outlook

Too many would-be home buyers have encountered real estate investor Ray Brown’s maxim that “The best time to buy a home is always five years ago.” Volatile mortgage rates; limited inventory; rapidly rising prices; supply chain shortfalls; and remote work opportunities contributed to the overheated U.S. residential housing market. They also created an “affordability crisis” for many potential buyers.

MARKET UPDATE | FOURTH QUARTER 2023

After peaking mid-year 2022, inflation has been on a steady trajectory downward, ending 2023 in the low 3% range and approaching the Fed’s 2% target. As a result of moderating inflation, the Fed left rates unchanged during the fourth quarter with a Fed Funds rate of 5.25%. Expectations are that rates will fall throughout 2024 with a series of rate cuts beginning in March and optimism is increasing that the U.S. economy will avoid recession. These combined to drive strong returns in both stock and bond markets in the fourth quarter, leading to very good full year 2023 returns. Markets will be closely focused on economic data in the coming months in hopes that inflation will continue to be contained and the economy remains resilient. “Inflation is taxation without legislation.” Milton Friedman

2024 Outlook: Perspectives on the Global Economy

Yogi Berra's timeless wisdom, encapsulated in the famous quote, "It's tough to make predictions, especially about the future," resonates with the perpetual challenge faced by forecasters across various domains. The unpredictability of events, such as the United Auto Workers strike, the collapse of Silicon Valley Bank, or the Israel-Hamas war in 2023, underscores the inherent difficulty in achieving precision in economic, financial, and political predictions. The Mather Group, LLC (TMG) acknowledges this unpredictability and the task of forecasting with humility as it presents its 2024 Outlook. Crafted by TMG's senior investment management team, our Outlook delves into potential factors that could significantly impact the global economy's equity, fixed-income, alternative investments, and geopolitical segments.

Fourth Quarter 2023 Market Returns: S&P 500 Sectors & Asset Classes

MARKET UPDATE | THIRD QUARTER 2023

As we progress through 2023, it increasingly feels that we are likely to remain in an elevated interest rates environment for the foreseeable future. Elevated rates are important, as they will affect the profitability of companies and the affordability of purchases financed by debt. In the third quarter, higher rates were a headwind, as both U.S and international stocks had negative returns, though they remain positive for the year. The U.S. economy has remained resilient, despite slowing growth. Higher interest rates were also a negative for bond returns in the third quarter, as they drove prices lower, especially for long-term bonds. However, we believe that this interest rate environment creates opportunity, as savers can be rewarded, and there is a compelling alternative to stocks in a diversified portfolio.

Third Quarter 2023 Market Returns: S&P 500 Sectors & Asset Classes

US Government Shutdown: Outlook and Potential Outcomes

In this report, The Mather Group, LLC (TMG) provides its outlook on a potential government shutdown, and how such an event might affect financial markets and the economy.

US Residential Housing Profile and Outlook

In this report, The Mather Group LLC (TMG) reviews the current state of the residential housing market and several key factors shaping its outlook. These factors include inventory trends, mortgage availability, land costs, and construction outlays. It appears that the trends for each of these factors may suggest continued stress in the housing market.

MARKET UPDATE | SECOND QUARTER 2023

Although a recession has been the consensus forecast since early last year, the economy has been surprisingly resilient and continues to grow. Despite some indications of a slowing economy, employment has remained healthy, and consumers are still spending money as reflected by increasing consumer confidence. Markets have produced surprisingly good results, with the Standard & Poor’s (S&P) 500 Index entering bull market territory and the NASDAQ 100 Index off to its best-ever start to the year with a 39.35% return in the first half. Technology has again led the stock market as investor optimism over artificial intelligence (AI) drives valuations higher. Confidence in technology stocks was also bolstered by cooling inflation data and the Fed’s hiatus from raising rates at its June meeting. Bond markets participated in the optimism as fixed income investors demonstrated an increased appetite for lower-quality bonds.

Second Quarter 2023 Market Returns: S&P 500 Sectors & Asset Classes

Revisiting the Benefits of International Diversification

One of our core investing tenets at The Mather Group, LLC (TMG) is diversification. Given that international stocks comprise about 40% of the world’s stock market capitalization, we believe that investors who focus only on the U.S. are missing an opportunity to increase long-term returns and reduce risk. This article highlights research and analysis to illustrate the benefits of maintaining a well-diversified portfolio that includes international investments.

Recessionary Outlook: Assessing the Likelihood

In this report, The Mather Group, LLC (TMG) shares its outlook for a potential recession, major factors that could cause it, and links among those factors. Recessions often need a chain of adverse events to occur—not just one, such as Fed tightening.

Debt Ceiling Negotiations: Status and Outlook

Since 1960, the debt ceiling has been raised 78 times, reaching its current level of $31.4 trillion. However, as our government is spending almost $4 for every $3 it receives in taxes and other payments, it appears necessary to raise the debt ceiling again just to pay for past Congressional appropriations—not to mention future ones. In this report, The Mather Group, LLC (TMG) reviews the status of and outlook for ongoing negotiations between the White House and the Speaker of the House of Representatives to raise the debt limit.

An Update on the Inflationary Outlook

While the recent banking crisis is still a primary focus of analysts, depositors, the Federal Reserve Board (Fed), and state and federal regulators, the specter of inflation continues to pose potential challenges for corporations, investors, and households. As a follow-up to our September 2022 report, Inflation, the Federal Reserve Board, and the Markets, The Mather Group LLC (TMG) is providing an updated perspective on the factors driving inflation, as well as its potential effect on the economy and the capital markets.

MARKET UPDATE | FIRST QUARTER 2023

Bank failures dominated headlines during the first quarter as the assets of failed banks rivaled the total level of assets across banks that failed in the early stages of the global financial crisis (GFC). Despite the increased risk within the financial sector, economic data remains strong with a very healthy job market. The Federal Reserve (Fed) felt confident enough to hike interest rates by another 0.25% at its March meeting. The rate of inflation fell to its lowest level since August 2021, boosting consumer confidence and leading to positive returns in stocks and bonds, largely based on the belief that Fed rate hikes will begin to slow.

Volatility and the Value of the U.S. Dollar

Recent volatility in the value of the U.S. dollar is causing concern for some investors. In this report, The Mather Group LLC (TMG) reviews potential factors that may be driving the dollar’s recent volatility, how this volatility might affect sectors of the U.S. economy, and what the outlook could be for the U.S. currency.

First Quarter 2023 Market Returns: S&P 500 Sectors & Asset Classes

Active Management vs. Index-based Investing: An Update on Performance

At The Mather Group, LLC (TMG), the annual S&P Indices Versus Active (SPIVA) Scorecard is an important data point in our pursuit of an evidence-based investment strategy. Standard & Poor’s monitors the ongoing performance of actively managed mutual funds to determine relative performance differences between funds that are attempting to beat the market and a fair benchmark. With the recent annual update, it appears 2022 was one of the strongest years for actively managed funds in the U.S. large-cap space over the prior 20 years; however, most active funds still underperformed their benchmark.

The Current Banking Situation: Economic and Market Perspectives

The financial stress that has affected a handful of banks during the last few days has resulted in both a swift regulatory response and increased market volatility. In this report, The Mather Group LLC (TMG) explores the origin of and response to this stress, as well as potential economic and market outcomes.

The Debt Ceiling Debate: Financial Reality or Political Theater?

At a magnitude of $31.4 trillion, the debt ceiling represents 123% of our nation’s current gross domestic product (GDP). This report focuses on the magnitude, sources, and outlook for the federal deficit, as well as analyze the current political debate that centers on linking any increase in the debt ceiling level to limits on future spending initiatives.

MARKET UPDATE | FOURTH QUARTER 2022

Persistent inflation forced the Federal Reserve’s (Fed) hand in raising interest rates to 4.5%, resulting in a repricing of all financial assets. The Fed’s sudden end to an era of easy money shook financial markets in 2022. Both U.S. and international equities entered bear market territory, with international stocks slightly outperforming those in the U.S. Bonds recorded their worst year ever in 2022, due primarily to the rapid rise in yields. The long-term outlook for stocks and bonds has improved due to more favorable valuations for stocks and higher expected yields for bonds.

Fourth Quarter 2022 Market Returns: S&P 500 Sectors & Asset Classes

2022 Election Perspectives: Potential Fiscal Policy, Monetary Policy, and Capital Market Responses

The 118th Congress convening on January 3, 2023, will see a two-seat majority for Senate Democrats and a nine-seat majority for House Republicans. What does such a divided Congress portend for fiscal and monetary policy, and how may the capital markets respond to such an election outcome?

MARKET UPDATE | THIRD QUARTER 2022

Fear is a natural response to a market selloff; it is nothing to be ashamed of. It’s during volatile market swings such as these where our advisors can earn your trust by helping you cope with some of the toughest aspects of investing. At The Mather Group, LLC (TMG), we pride ourselves on being there for our clients when it matters most. Not only do we help you avoid detrimental panic selling, but we also help you take advantage of market volatility by adding value through time-tested, proven strategies, including tax loss harvesting, asset class rebalancing, and accelerated Roth conversions, when appropriate.

Third Quarter 2022 Market Returns: S&P 500 Sectors & Asset Classes

Inflation, the Federal Reserve Board, and the Markets

Historians often write about “linkages,” tying together significant social and economic forces occurring on a global scale. One example is the trade linkages that helped to create and expand Great Britain’s 19th century empire.In this report, The Mather Group, LLC (TMG) offers its perspectives on the linkages found between our current inflationary pressures, ongoing initiatives by the Federal Reserve Board (Fed) to combat them, recent equity and credit market volatility, and TMG’s response in its management of client portfolios.

Staying the Course Amid Pullbacks and the Folly of Predictions

During times of heightened volatility, as we’ve seen throughout 2022, The Mather Group, LLC (TMG) aims to share a perspective that is grounded in a long-term, evidence-based view of the facts. We strive to be a voice of reason that helps clients remain calm, since we believe one of the biggest mistakes investors can make is to emotionally sell and lock in permanent losses during moments of stress.

MARKET UPDATE | SECOND QUARTER 2022

The U.S. Federal Reserve (Fed) hiked interest rates by 0.75% in June and plans to keep hiking rates in an attempt to reduce elevated inflation, which currently stands at 9.1%. U.S. and international equity markets remain vulnerable to various headwinds, including: elevated inflation, globally synchronized central bank tightening, the Russia/Ukraine conflict, and supply chain bottlenecks. Bonds posted their worst-ever start to a year due to a rapid rise in yields and the aforementioned headwinds. During such periods of market volatility, The Mather Group, LLC (TMG) deploys various strategies to help add value, including tax loss harvesting, asset class rebalancing, and accelerated tax strategies, when appropriate.

Second Quarter 2022 Market Returns: S&P 500 Sectors & Asset Classes

Perspectives on Recent Economic and Market Events

Many investors are becoming increasingly concerned as they view potential storm clouds gathering on the horizon. Their concerns include continuing market volatility, rising inflation levels, and slowing economic growth. In this report, we analyze each of these events and identify several potential linkages among them.

A Review of U.S. and International Markets

Since U.S. stocks have outperformed international stocks for more than a decade, clients often ask for our insight on the benefits of investing in international markets. Despite U.S. stock outperformance, international markets have an important role to play as part of a diversified portfolio.

Reactions to Market Downturns—and Potential Implications

Recent market volatility is stressful to many investors and invites comparisons to prior selloffs, especially the 2020 onset of the COVID pandemic. In this report, The Mather Group, LLC (TMG) reviews the outcome of that sudden market fall, the risk of a market downturn leading to a U.S. recession, and the potential financial cost of “market timing” during a selloff.

A Perspective on Recent Market Volatility

Markets are said to abhor uncertainty, often displaying their displeasure through sudden, heightened levels of price volatility. Due to a confluence of factors that The Mather Group, LLC (TMG) will explore in this report, markets last week experienced volatility levels not seen since the outset of the pandemic in March 2020.

MARKET UPDATE | FIRST QUARTER 2022

The U.S. Federal Reserve (Fed) hiked interest rates by 0.25% in March with additional plans to rapidly wind down its $9 trillion balance sheet. Additional rate hikes are planned for 2022 with 0.5% rate hikes on the table. U.S. and international equity markets reached correction territory during the first quarter due to various headwinds, including elevated inflation, globally synchronized central bank tightening, the Russia/Ukraine war, and supply chain bottlenecks. Bonds posted their worst quarterly return since 1980 due to a rapid rise in yields and the aforementioned headwinds. During such periods of market volatility, The Mather Group, LLC (TMG) deploys various strategies to add value, including tax loss harvesting, asset class rebalancing, and accelerated tax strategies, when appropriate.

Inflation: Are We There Yet?

Central banks, businesses, investors, and households are increasingly focused on rising inflation levels. As described by Karl Otto Pohl, former head of the German Central Bank: “Inflation is like toothpaste. Once it's out, you can hardly get it back in again.” In this report, The Mather Group, LLC (TMG) shares its perspective on inflation, identifies several drivers of inflation, and assesses the potential outlook for inflation.

First Quarter 2022 Market Returns: S&P 500 Sectors & Asset Classes

Market Volatility: An Opportunity for Tax-Loss Harvesting

Periods of market volatility occur intermittently, and they are unwelcomed by most investors. Rather than confront such volatility with resignation, investors can benefit from portfolio management strategies that aim to increase their cashflow through tax-optimization programs.

Geopolitical and Military Events: How Have U.S. Markets Responded?

While events are still unfolding, Russia has taken swift action to achieve at least two goals in its confrontation with Ukraine. First, it has formally recognized two Eastern Ukraine “statelets” as independent countries. Second, Russia has moved troops to occupy both territories. Western nations, including the U.S., are now coordinating non-military responses to this incursion, primarily in the form of economic sanctions.

Market Volatility: A Look Past and Forward

Market indices have recently demonstrated higher than normal levels of volatility, causing many to question the sources. While no one can predict when such volatility will abate, The Mather Group, LLC (TMG) would like to offer an explanation of some of the potential variables driving it. More specifically, these would include pending interest rate hikes by the Federal Reserve Board (Fed); rising geopolitical risk in Eastern Europe; continued inflationary pressures; and lingering supply chain challenges.

MARKET UPDATE | FOURTH QUARTER 2021

Two years into the pandemic, we are faced with levels of inflation not seen in 40 years. To stabilize prices, the Federal Reserve (Fed) plans to tighten monetary policy by raising interest rates and shrinking its almost $9 trillion balance sheet. Despite this and supply chain disruptions, markets continue to break all-time highs as U.S. stock returns were strong in 2021. International returns were suppressed due to Chinese reforms and COVID-19 in 2021 but were generally positive. While bond performance was muted in 2021 due to rising yields, they are a vital risk-mitigation tool in a well-diversified portfolio.

Fourth Quarter 2021 Market Returns: S&P 500 Sectors & Asset Classes

"Known Unknown": COVID and Market Volatility

The emergence of Omicron, a COVID variant discovered in South Africa, has recently triggered heightened levels of market volatility. While more knowledge of this variant will surface in the coming days and weeks, at this point it may best be described as a “known unknown.” Donald Rumsfeld, the late Secretary of Defense, coined this phrase to describe events of which we are aware but lack sufficient knowledge about their potential effects. More specifically, what may the effects be of this new variant on public health, the economy, and markets?

MARKET UPDATE | THIRD QUARTER 2021

Despite COVID-19 causing the most severe economic shock since the Great Depression, the U.S. has experienced one of the fastest recoveries since World War II (WWII). With a strengthening labor market and inflation running hot, the Federal Reserve (Fed) plans to begin reducing monetary stimulus (i.e., tapering asset purchases) in the coming months. U.S. equity markets outperformed international markets during the third quarter, as both were constrained by global supply chain disruptions. In the months ahead, we could see increased market volatility. Bonds have not performed well this year and will likely continue to face pressure from the Fed, inflation, and rising rates. However, bonds play an integral role in a well-diversified portfolio and are key to managing and mitigating risk.

Third Quarter 2021 Market Returns: S&P 500 Sectors & Asset Classes

The drivers of return are constantly changing each year, which emphasizes the importance of a well-diversified portfolio. In this article we provide a snapshot of recent S&P 500 sector and asset class performance.

Market Volatility Amidst Financial Uncertainty

When T. S. Eliot wrote in his poem, The Waste Land, “April is the cruelest month”, he obviously was not thinking about stock market returns. In fact, in the 20-year history of S&P 500 monthly returns since 2000, April’s average return of 2.4% was the highest for any month. In 2021, April’s return was even higher at 5.2%. September is actually the cruelest month, recording an average loss of -0.83% during the period. In 2021, September continued its historic weak performance, falling 1.5% through September 24th. While there were myriad reasons for such negative prior performance, The Mather Group, LLC (TMG) would like to focus on several potential sources of this month’s market volatility. These include a looming debt crisis in China and uncertainty about future policy changes at the Federal Reserve Board. These appear to be transient in nature, and may soon lead to October, historically the second-highest performing month of the last 20 years. In addition, TMG will review the continuing financial strength of both US corporations and households.

A Review of the ESG Landscape

As time has progressed, institutional and retail investors have made it increasingly clear that they expect their investments to place more emphasis on being socially responsible, which can be measured with ESG (Environmental, Social, & Governance) factors.While there are potential monetary benefits to allocating capital to companies that grade well on ESG metrics, this is still an evolving area of investing, and there are challenges to navigating it.

MARKET UPDATE | SECOND QUARTER 2021

Despite growing concerns over inflation, U.S. markets continue their strong recovery as the economy reopens. While new economic data indicates increases in price levels, the Fed continues to hold rates near zero, citing supply chain issues, hiring difficulties, and other post-pandemic transitory factors as the main causes for this inflation. International markets struggled, underperforming U.S. markets in the second quarter, led by limited vaccination progress and renewed lockdowns as new COVID-19 variants emerge. Bonds posted strong returns in the second quarter, fueled by an unexpected drop in Treasury yields. In periods of market volatility, The Mather Group (TMG) continues to add value through its use of tax loss harvesting, rebalancing of portfolios, and accelerating tax strategies, when appropriate.

Second Quarter 2021 Market Returns: S&P 500 Sectors & Asset Classes

America's Changing Demographics: A Looming Gray Tsunami?

With life expectancy continuing to increase, it is important to highlight three resultant outcomes already set in motion: a dramatic shift in America’s demographics; a significant realignment of our economy’s workforce; and an increasing burden on the funding of Federal social benefit programs such as Medicare and Social Security.

How Diversification Boosts Market Outcomes

Over the past decade, U.S. markets have generally outperformed international markets, leading many to question the need to maintain international diversification in their portfolios. However, diversification remains a core tenet of The Mather Group’s (TMG) portfolio construction for a number of reasons. In this article, we will walk through what diversification means, how it can ultimately lead to better long-term outcomes, and how we implement diversification within TMG’s portfolios.

WHAT’S THE DEAL WITH INFLATION?

Inflation has recently been an increasingly hot topic for market pundits, government officials, Federal Reserve Board members and investors. In this discussion, we will go well beyond the causes of inflation and traverse frequently asked questions focusing on how inflation impacts investors.

MARKET UPDATE | FIRST QUARTER 2021

Historically, many investors viewed their investments with an income focus. As the world evolves and yields decline, we believe investors are better served with the way The Mather Group, LLC (TMG) manages portfolios, which is with a total return focus. In the U.S., markets and economic data continue to improve, and some of the improvement has been reflected in better performance for value-oriented companies that have lagged growth over the past 10 years. International markets had positive returns but have run into some headwinds with renewed lockdowns. Despite the setback, there are still reasons for optimism. Fixed income saw yields rise rapidly, which led to the 2nd worst start of a year for bonds since 1926. TMG’s clients benefited due to short duration positioning which helped mitigate the drop in bond prices. Please see our additional thoughts in our full commentary.

First Quarter 2021 Market Returns: S&P 500 Sectors & Asset Classes

In addition to our quarterly market commentary, The Mather Group, LLC is excited to introduce two new market performance charts, which we also plan to provide on a quarterly basis. These charts visually demonstrate that the drivers of return are constantly changing each year, which emphasizes the importance of a well-diversified portfolio.

A Look Back at a Year of COVID-19

During this ongoing COVID-19 pandemic, we have collectively experienced a lot of turmoil, but also come a long way since the early days of the pandemic. Looking back to last year, on February 14, the Standard & Poor’s (S&P) 500 was sitting at a 3,380 reading. As we started to receive more data, the picture quickly changed.

A New Administration: Politics and Prosperity - Or Not?

At the outset of a new Administration, investors often focus upon the potential macroeconomic and financial market outcomes which may result during its term in office. Some of the factors shaping these outcomes include initiatives in areas such as fiscal and tax policy, regulatory oversight and the response to such changes by the equity and bond markets. Of course, a new Administration does not operate in a policy vacuum, but needs support from both the legislative and judicial branches of government to achieve its goals.

A Look at Bitcoin and the Cryptoasset Space

Since 2017, when cryptocurrencies or cryptoassets like Bitcoin first had a major run-up, we have continued to receive questions around the appropriateness of buying cryptoassets like Bitcoin.

BEHAVIORAL FINANCE IN THE ERA OF GAMESTOP

If markets are efficient, how does one explain the volatile price movements in the stock of an otherwise declining retail business such as GameStop? More specifically, the stock reached a 52-week high of $483 on January 27, 2021, before closing that day at $348. However, its share price began at $17.24, and closed February 19, 2021 at $40.59. In between these dates, its soaring market price seemed to defy any concept of market efficiency.

MARKET UPDATE | FOURTH QUARTER 2020

Looking back at the past decade and further, we saw benefits to investing in international markets and expect this to continue in the future. In the U.S. we continued to deal with the pandemic, but economic data and market returns were improved. International markets were mixed, but Emerging Markets helped lead the world market recovery in 2020 and several countries have seen life return to normal. Fixed income continued to demonstrate diversification benefits with strong returns in 2020 and can serve as a safe haven in the midst of turmoil.

Bond Diversification

Does it make sense to own bonds when they are paying historically low interest rates? Short answer, yes. There are four main benefits of owning bonds even in a low interest rate environment.

Potential Global Trends and Impacts of a New Administration

This has been a volatile and transformative year for the global economy. The COVID-19 pandemic has affected individuals and companies. We have seen that the effects of the pandemic and current recovery have not affected all equally as well. Looking forward there seems to be an expectation that there will be some lasting changes as a result.

An Initial Post-COVID-19 Economic Outlook

With several promising COVID-19 vaccines emerging from trials, households and businesses can begin envisioning and planning for a post-COVID-19 economy. There is no guarantee that COVID-19 will be eliminated entirely, of course, but a robust vaccination program should restore some measure of social and economic activity. In addition, the magnitude and timing of existing and proposed fiscal and monetary stimuli should aid the economy in restoring its former momentum.

MARKET UPDATE | THIRD QUARTER 2020

The upcoming election has led to more questions about the impact of Presidents on the markets. Based on history, there does not seem to be an ironclad answer, though expected tax policies do provide guidance for planning purposes. The COVID-19 pandemic continues, and while there have been encouraging developments in treatments, caution seems prudent as there seems to be an uptick in cases in Europe, according to the European Center for Disease Prevention and Control. Despite the backdrop, global market returns have been solid as economies continue to recover, and governmental policies remain supportive of growth. No matter the outcome of elections or other world events, The Mather Group is here with our consistent systems and approach to help you achieve your long-term goals for you and your family.

MARKETS ARE NOT A PERPETUAL MOTION MACHINE: A PERSPECTIVE

Despite a blistering upward trend in the S&P 5001 since its March 23rd bottom (up 60.0%), the market demonstrated a disappointing reversal on September 3rd, falling 3.5%. However, if an investor deconstructs recent market performance, then it becomes clear that the market is not really the monolithic entity which pundits report upon daily, if not hourly. More specifically, the S&P 500 is constructed of 11 sectors, and the relative performance of each sector shows a wide disparity in their 2020 returns. As shown in the graphic below, just 3 sectors, i.e. Communications Services, Consumer Discretionary and Information Technology, have driven the bulk of recent market returns. Yes, despite the hoarding of paper products, the Consumer Staples sector has had a relatively mild level of performance. And, despite the complexity of the pandemic, the Healthcare sector has only slightly exceeded 5% in its year-to-date return. This is a summary of the attached article (link), and full details and disclosures are included within.

MARKET UPDATE | SECOND QUARTER 2020

Markets experienced a historic recovery during the second quarter, with U.S. stocks posting their best quarterly results in two decades according to the Wall Street Journal.1 While the economic climate continues to improve from first quarter lows, further recovery is likely contingent upon our ability to contain COVID-19. Faced with the current public health crisis, the Fed stated it will likely keep rates at zero for the foreseeable future. During the recent period of market volatility, many active managers failed to generate alpha and underperformed passive index strategies, potentially due in part to poor market timing. We believe both recent and long-term results reinforce The Mather Group’s long-held belief that index-based investing best serves the needs of our client families, especially in times of increased uncertainty.

MARKET TIMING: WHAT RECENT AND HISTORIC MARKET RETURNS HAVE REVEALED

An apt description of markets in 2020 may have been written by Charles Dickens 161 years ago, “It was the best of times, it was the worst of times...” After achieving record highs for the Dow, S&P 500 and NASDAQ indices February 12th, the markets began their unprecedented descent February 20th, resulting in a 37% fall in just 28 trading days. One result was that individual investors—some unsure but many in panic—withdrew $62 billion from equity mutual funds during that short period, and then an additional $71 billion during the following two months. So, a total of $133 billion was thought by these investors to be shielded from further market losses. But, was a shift to cash rewarded by following this market timing strategy? Unfortunately, for many of these investors, the answer is a resounding “No”. If an investor were out of the market, i.e. in cash, for only 5 of the best trading days in 2020, then the investor would have suffered a 30% portfolio loss compared to another investor who remained fully invested throughout 2020. This is a summary of the attached article (link), and full details and disclosures are included within.

All Stock Market Rallies Are Not Created Equal: This Week’s Market Volatility

All Stock Market Rallies Are Not Created Equal: This Week’s Market Volatility On February 19th, 2020, the S&P 500 reached a historic high of 3,386. Only 33 days later (just 23 market trading days) on March 23rd, 2020, the S&P 500 Index1 had fallen 33.9% to a level of 2,237. The primary sources of this significant decline were threefold: the growing dimension of the COVID-19 pandemic; resultant concerns about its potential economic and financial fallout; and a somewhat tepid initial response to the pandemic by institutions such as the Fed, the U.S. Treasury and various levels of government.

MARKET UPDATE | FIRST QUARTER 2020

During the first quarter of 2020, equity and fixed income markets experienced extreme bouts of volatility due to the coronavirus pandemic. In response, the Fed rapidly unleashed unprecedented levels of stimulus while simultaneously injecting much needed liquidity into the financial system.

RESTORING AMERICA’S ECONOMIC & FINANCIAL MOMENTUM: AN UPDATE

RESTORING AMERICA’S ECONOMIC & FINANCIAL MOMENTUM: AN UPDATE Responding quickly to the accelerating stress resulting from the Covid pandemic, Congress and the Fed have each undertaken a series of initiatives to restore America’s economic and financial momentum. More specifically, Congress has focused on assuring solvency for households, corporations and other vital organizations. In turn, the Fed has acted to maintain sufficient liquidity throughout the financial system. In this note, The Mather Group would like to provide a quick summary of several key elements of these initiatives.

Bear markets and their historic financial and economic recoveries

Bear Markets and their historic financial and economic recoveries The market selloff on March 16th has resulted in a 29.5% fall from the market peak reached February 19th, using the S&P 500 as the benchmark. Declines which exceed 20% are often deemed “bear markets,” and raise investor concerns with respect to the magnitude and timing of their potential recovery. In this note, The Mather Group would like to share some historic data which illustrates the financial and economic recoveries from both prior bear markets and pandemics.

Important Questions and Answers About Recent Market Volatility

IMPORTANT QUESTIONS AND ANSWERS ABOUT RECENT MARKET VOLATILITY The Mather Group continues to monitor the interplay between market volatility and the spread of the COVID-19 virus. Thus, we would like to share with you our current outlook, framed within the context of six primary questions discussed recently by members of our Investment Committee. If our outlook changes, we will share further updates with you, of course.

A Look Back - And Forward - At This Week's Market Volatility

A LOOK BACK - AND FORWARD - AT THIS WEEK'S MARKET VOLATILITY This has been an information-intensive week displaying the continued health of the US economy. February saw the creation of 273,000 new jobs, while the 3.5% unemployment rate remained at a 50-year low. Wages continued to grow at a 2.9% annual rate, while inflation stayed subdued at 2.5%. Workforce participation rates continued at their high levels, or 72% for males and 59% for females.

The Market Volatility Conundrum

THE MARKET VOLATILITY CONUNDRUM With the significant uptick in worldwide Covid-19 cases, there has been a parallel increase in equity market volatility. US equity markets, as measured by the S&P 500, have now experienced a “correction”, or a drop of 10%. In this note, The Mather Group would like to share its perspectives on some of the factors driving this volatility, identify our risk management tools in use to limit portfolio erosion and demonstrate that markets have responded quickly—and often quite positively—to past corrections and pandemics.

MARKET UPDATE | FOURTH QUARTER 2019

Low rates continue to be a boon for both equity and fixed income markets. The Fed lowered rates for the 3rd time in 2019 and adopted a more accommodative monetary policy than previously held. Going forward, the Fed is signaling a wait-and-see approach to additional rate changes, leading many to believe that rates will remain unchanged throughout 2020. In addition to low rates, the easing of hostilities in the US/China trade war also helped to bolster investor confidence and rally the markets. With the phase one trade deal expected to be signed in Q1 2020, investors remain optimistic that continued progress will help drive positive market performance. International equities have continued to underperform relative to their US counterparts. However, when looking at valuation metrics, international equities are looking increasingly attractive to investors.

Coronavirus Sparks Market Selloff - The Benefits of Staying Invested

Markets sold off today as the number of new coronavirus cases spiked outside of China, with the disease spreading to over 28 countries. It’s still too early to know how severe the impact will be to global supply chains and the economy, however, it’s moments like these that define an investor and their long-term outcome. Many will try to time the market in an attempt to avoid losses, however, history has repeatedly shown us it’s best to remain invested. It’s not easy being an investor, and today is a great example of that. This article explains why we fundamentally believe clients are better off staying invested and outlines the pitfalls of trying to “time the market.”

MARKET UPDATE | THIRD QUARTER 2019

The U.S. continues to outperform global markets as Europe and China increasingly show signs of weakness. U.S. equity markets were choppy during the 3rd quarter but ended in positive territory, unlike global equities, which ended slightly down. Falling yields continue to fuel the U.S. bond rally. As market participants anticipated, the Fed cut rates twice and signaled a willingness for more accommodative monetary policy in an effort to support the economic expansion. For the first time, passive U.S. equity funds surpassed active fund strategies, solidifying a paradigm shift towards passive indexing and away from active management. Globally, the same headwinds to market stability linger: the U.S. and China trade impasse, Brexit deal uncertainty, and escalating tensions with Iran.

MARKET UPDATE | SECOND QUARTER 2019

US Stocks and bonds continued their rally in the 2nd quarter, with stocks posting their strongest first half returns since the dot-com boom. Both markets arereacting strongly to the same event – increasing likelihood of at least one fed rate cut in 2019. Though this market expansion is now a bit long in the tooth (atjust over 10 years), the return of easy money policies could extend the party.Globally, the same threats to market stability still linger. Brexit has been delayed, the US and China are at an impasse in trade deal negotiations and tensionswith Iran have worsened. International markets have trailed the US slightly through the first half of the year as their economies navigate these issues.

MARKET UPDATE | FIRST QUARTER 2019

While 2018 ended with US and international equities selling off in the fourth quarter, 2019 has begun with equities bouncing back and fixed income posting its strongest quarterly return in three years. Despite the geopolitical uncertainties of “Brexit” and US-China trade relations, the US economy continues to demonstrate strength, evidenced by solid wage growth and low unemployment below 4%. Additionally, the Fed has helped calm markets by taking on a more dovish tone regarding rate hikes, due in part to subdued inflation.

A Quick Glance At Health Savings Accounts

The cost of affordable healthcare has been a topic front of mind for many Americans lately. As such, businesses and individuals are on the hunt for the most financially savvy ways to save and pay for not only the cost of healthcare, but also medical procedures, prescriptions, and doctor’s visits. One option to help you save for health care costs, reduce taxes, and potentially increase retirement savings, is a Health Savings Account (HSA).

Navigating the IRA Landscape: Limits, Choices, and Strategies for 2023 and 2024

As we step into the new financial year, understanding the nuances of Individual Retirement Accounts (IRAs) becomes paramount for those planning their financial futures. In this discussion, we'll jump into three key aspects: IRA contribution limits for 2023 and 2024, the choice between pre-tax and after-tax contributions, and the intriguing concept of backdoor Roth contributions.

Age 50 or Older? Be Sure to Capitalize on Retirement Catch-up Contributions

If you've surpassed 50 years of age, you qualify for an AARP membership and many potential discounts for goods and services. You are also eligible to start making catch-up contributions to your retirement savings accounts.

Maximizing your Retirement Contributions before it's too Late

As the year-end approaches, it's crucial to make the most of the tax advantages offered by your retirement account contributions while also planning your savings strategy for the upcoming year. The amount you contribute and the types of accounts you choose can significantly impact your financial plan's success. It's essential to maximize contributions to tax-advantaged accounts when possible while considering your current and future financial situation.

Four Steps to Minimize the Impact of Diminished Mental Capacity

Being prepared for the possibility is the key to successfully navigating diminished mental capacity if it comes to fruition. Once dementia occurs, things move fast, and the complexities increase substantially. Besides cash flow management, what else can you do to minimize the financial and emotional impact diminished mental capacity can cause?

How to Talk About Money with Adult Children

Our wealth advisors at The Mather Group, LLC (TMG) understand that conversations about money—even with your closest family members—can be awkward. However, when you have children who are poised to receive financial gifts or inherit wealth, we encourage you to initiate a dialogue with them about it.

An Analysis of Social Security and Medicare Solvency

In this report, The Mather Group LLC (TMG) reviews both the current and projected financial profiles of these programs, as well as potential benefit and funding strategies intended to avoid future program reductions. Given the increasing interest in linking Social Security and Medicare costs to the looming debt ceiling negotiations, TMG believes an in-depth review of these programs is both timely and material.

Dealing with Death: A Financial Checklist

The death of a loved one is one of the most difficult experiences that we can go through. It is impossible to be completely prepared for what that experience will be like. Our advisors and team members strive to do what we can to help our clients manage some of the challenges associated with the passing of a loved one. This includes providing considerations for having your affairs in order, come what may, as well as offering support and guidance about items to address in the wake of a loved one’s death.

Five Tips for Safeguarding Your Retirement

Review our suggestions to help keep your retirement on track.

Tune Up Your Property and Casualty Insurance

While a lot of attention is paid to tax and investment planning at the start or end of the year, we want to make a case for the importance of annual insurance planning. A review of your property and casualty (P&C) insurance policies helps you address how your coverage needs change over time and assess whether you have the proper coverage at a competitive rate. We encourage this periodic, proactive assessment because the worst time to find out you don't have the right P&C insurance coverage is after you need it.

Key Retirement Provisions of the SECURE Act 2.0

After months of deliberation, the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 has finally been signed into law as part of the year-end omnibus spending bill. The SECURE Act 2.0 builds upon the original SECURE Act, which was enacted in 2019. Overall, this legislation provides new incentives for individuals to save for retirement and represents an important step in ensuring Americans have a secure financial future in their retirement years.

Demystifying Medicare

Learn the tips and tools to assist you in managing health care costs in retirement.

The Value of Financial Planning

Financial planning is at the heart of how we help our clients at The Mather Group, LLC (TMG). Because the comprehensive and customized planning we provide fosters strong, long-term relationships, the TMG team has the privilege of seeing the direct impact it has on our clients’ lives—day-to-day and over time. Different stages of life offer distinct opportunities to illustrate how transformative it can be to have a time-tested financial planning framework and a trusted, experienced advisor as your guide.

Retirement Planning And the Economic Cycle of Life

Retirement planning requires long-term consideration of many variables, including one’s physical health, lifetime earnings, and disciplined saving. Awareness of the interrelationship of these variables over one’s lifetime can help workers and retirees craft better retirement strategies. Careful implementation of these strategies may help retirement funds last longer.

CONGRESS PASSES THE SECURE ACT

Congress recently passed an appropriations bill that is expected to be signed by the President. Attached to the spending bill is The Setting Every Community Up for Retirement Enhancement (SECURE) Act that was previously passed by the House and stalled in the Senate. The SECURE ACT is being sold as a way to help our country’s retirement savings crisis by enhancing access to retirement plans and increasing the flexibility of those plans. Although the plan will allow more people to access and contribute to retirement plans, other parts of the Act appear to be designed to increase revenue for the Federal government and financial services companies that sell products.

REGULATION BEST INTEREST: IS THIS THE BEST THE SEC CAN DO?

Earlier this month, the Securities and Exchange Committee (SEC) adopted Regulation Best Interest, a ruling that will increase the standards of broker-dealers. The proposed solution is set to go into effect in June 2020. Our founding partner, Stewart Mather, shares his thoughts on the ruling.

Roth 401(k) vs Roth IRA- Which is the Better Retirement Plan for You?

The good news for Americans who want to save more money for retirement is that there is a wide range of tax-advantaged retirement savings plans to choose from. Two of the most popular are Individual Retirement Accounts (IRAs) and 401(k) plans.

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