Dividend investing has been big in the last several years and it was looking like it was going to be another great year. Well, I think we all know what changed this – yes, the Coronavirus. U.S. Gross Domestic Product fell at a 5% rate in the second quarter and could go down as much as 39.5% according to the Atlanta Federal Reserve. With that being said, companies cut dividends by $5.5 Billion in the first quarter of the year. In the second quarter, dividends were cut by $42.5 Billion. Most companies made this move to preserve cash and we do feel when the pandemic is over that dividends will be back on the way up. However, this could be a 3-5 year period before we get back to the levels that we were at pre Coronavirus.
With all of the doom and gloom in the world these days we wanted to provide a more upbeat article for you to read. This article looks into retirement and what are the best states to live in during your retirement. Florida came in as the best state to live in. A quarter of the state’s population is age 60 or older and it obviously has sandy beaches and warm weather. The average home price in Florida is not at $252,000. We could give you 5 guesses on who came in at number 2 on this list and we doubt that anybody would come up with the 2nd best state to live in during retirement – Minnesota!!!
This article makes a lot of great points regarding 401(k) investing and the need for employees to continue saving in their retirement accounts no matter what the circumstances. If an employee were to review their first quarter statement they may have found themselves down 30 – 40% or more on their 401(k). That turned around very quickly in the 2nd quarter and they may find themselves closer to breakeven now. Fidelity Investments did a survey of 302 companies and found that 82% aren’t considering a match reduction or suspension of their plan. While 9.6% of companies have cut or suspended their match, about half say they have active plans to reinstate it in the future. Another important topic from this article is that if you have lost your job during this pandemic, don’t ignore your 401(K) account. You should consider rolling it over to an IRA account and manage the account that way. Just because you lost your job doesn’t mean you need to lose your 401(K) as well.
With interest rates at all time lows, that has also brought mortgage rates down to all time lows. The 30-year fixed mortgage rate this week was at 3.18% while the 15-year is at 2.62%. However, banks and lenders have retained tight underwriting standards for home loans, pushing the average credit score above 700. This is causing younger buyers to delay their home purchase. The average credit score among buyers between the ages of 30 and 39 is 673, which disqualifies them from financing a home. Lenders have done this in order to reduce their risks and not put themselves in a position again like the 2008 housing crisis.
Elon Musk – the CEO of Tesla is walking a fine line. He is opening back up his production facility for cars in California and the electric battery facility in Nevada without a plan in place. He has also stated that employees who are “no-shows” when the facilities open back up are at risk of having their unemployment insurance claims denied. While we believe that opening up the economy is the right thing to do, we also believe that you must have a plan in place. Without a plan in place, we risk a second wave of the Covid-19 virus to be spread which could cause significantly more harm to the World economy.
We wanted to provide you with a feel good story this week about the coronavirus after we have all been on lockdown and haven’t heard good news in a while. This article is about a few people in their late 90’s, early 100’s who have been doing some amazing things to help raise money to fight the impact of the coronavirus. You may have heard of Captain Tom from the U.K. who just turned 100 years old and raised over $39 Million for the National Health Service’s fight against the coronavirus. Enjoy.
It has been stated for the past month that closing down the US economy was the right thing to do. Nobody knew how the Corona-virus would spread or how many people it would affect. As we all adjusted our lives to this new way of living, we are now asking the question on when should the economy open back up? It seems that everybody has an opinion on this and nobody knows who is right. Georgia and South Carolina are the first to open up their economies with another group not far behind. We see States grouping together because they want to have a fair and safe reopening. Imagine if Indiana were to open up business in their state and Ohio stays closed for an extra month. Not only will Indiana companies gain a lot of business from Ohio, Ohio will lose business and may never get it back. State’s have to be cognizant of this fact and at the same time be careful not to open up too early and face a second wave of the virus. 04.29.20
There have been a variety of changes to the income tax scene over the last few weeks: 2020 RMDs waived, 2019 tax payments extended, and a $300 above-the-line charitable deduction just to name a few!
Andy Young, our in-house CPA and CFP®, hits the highlights in our latest video.
We like articles like this that think outside of the box and consider what the future will be like. This article considers 11 items that could be extinct in the next several years because of changes to the economy due to the pandemic and also just changes to the way we do business every day. It is pretty surprising that Touch Screens is one of the categories. If you look around us everyday there are touch screens everywhere you go – Fast food restaurants, ATM’s, airports, rental cars and much more. It seems that this technology has been ramping up for sometime now so companies could use less workers and save on costs. Now they are going to have to come up with something new to be able to clean the screens after each use. 04.24.20
The recent wave of fear surrounding the Coronavirus had led to the lowest all time average rate for 30 year fixed mortgages this week (at 3.29%). With the cratering of the mortgage rate, talks of refinancing mortgages have sparked among the masses of homeowners in America. According to data from Black Knight, Americans stood to save an average of $268 monthly if they were to refinance their mortgage with the current mortgage rates. Given the circumstances, many experts encourage homeowners to explore refinancing their mortgages. Still, refinancing at the current mortgage rate is not a full proof plan to save money. Refinancing can cost thousands of dollars in fees, and taking on too steep of a monthly payment could prove to be a disaster when the economy is as unpredictable as it is now. People should make sure to seek professional financial help to ensure their financial betterment and safety. Still, with the right help, refinancing a mortgage can save thousands of dollars for a homeowner.