MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics.
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Now that you have a head start on spring cleaning, your taxes are hopefully filed, and you've reconnected with friends and family, what next?
Warm weather is on the horizon and although spring planting should not start until May 15 due to freeze warnings, you can still begin preparing garden spaces by weeding and cultivating. Mowing season in underway. Head outside to get some Vitamin D on a daily basis.
Do you have any projects or hobbies you have been wanting to tackle? Now might be a good time to focus your attention here. It could be cataloging photos, cleaning up your computer hard drive, sorting collectibles, or re-visiting an enjoyable activity you've abandoned due to lack of time. Reading, cooking, needlework, scrap-booking, puzzles, painting and sketching are all good choices. Do you have other ideas or interests? We would love to learn how you are keeping busy.
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AFP sends a sincere thank you to all front line workers and to our clients who answered the call to work in these fields. We greatly appreciate your efforts to help us through the coronavirus pandemic. This includes all first responders, health care workers, supply chain workers, and educators to name a few. There are many more of you and you know who you are! To honor your heroism, AFP is making a donation to The Columbus Foundation. We are all in this together!
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- Effective April 15, we have increased our social distancing policy. Teri is working in the office while Bob and Tracey are working from home. We are here for you and able to meet your needs despite this temporary arrangement.
- For your safety, we are not scheduling in office meetings. We can host Virtual Meetings using Zoom. For our Wealth Management clients, the Wealth Management Navigator also offers a virtual meeting solution. For those concerned about Zoom, we use a subscription version which includes increased security features.
- For those that must visit our office, please check in with us prior to visiting. Remember that construction on a multi-use building is underway catty-corner to our office. Additionally, the school construction across the street has also commenced. There may be road closures periodically.
- We've launched Share File to replace the upload capabilities of the Morningstar Portal. It is an online portal which provides access to a client folder. It can be used for transferring documents between AFP and yourself. Both parties will have the ability to download and upload documents. We will be initiating this on an as needed basis.
- Share File includes an easy to use email encryption feature. We now have the capability of sending sensitive information via encrypted email, when necessary.
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Scam Alert
- Please continue to be vigilant with regard to scams. There are new ones daily. Please don't fall victim to these opportunists. If it seems too good to be true, it probably is. Consider reporting to your state attorney general.
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FYI
Tax Filing Deadline Extended & Qualification of Stimulus Payments
- The tax filing deadline for 2019 tax returns has been extended to July 15. This also included any estimated payments for the 1st quarter of 2020. However, the 2nd quarter payment is still due by June 15th 2020. As of this writing, Ohio has a bill pending that mirrors the changes in the Federal tax filing changes.
- Payout of the individual stimulus relief plan is based on either your 2018 tax return or if you have already filed your 2019 tax return (whichever is most current). However, if you have not filed yet, you need to pay attention to any significant differences between these two years and if one year may qualify you to receive (based on income) and another year does not. If you have not filed your 2019 return yet, review what is being passed into law today to determine what may make sense for your situation. Read the article "What You Need to Know About Payments" below.
CARES ACT and your 2020 Required Minimum Distribution (RMD)
- Required Minimum Distribution requirements for 2020 have been suspended, meaning you do not have to take an RMD this year. If you have already completed your RMD for 2020, there is an opportunity to rollback these funds to your account. Already-taken RMDs may be rolled back into the account if;
- Done within 60 days of distribution.
- If greater than 60 days and it can be shown that the individual has been impacted by the COVID-19 crisis, then the roll back can be completed anytime for the next three years (from the date the distribution was received).
- There is no roll back option for Beneficiary RMDs from inherited accounts.
Portal Updates for Orion clients
- The Orion Portal launch is now complete. There are a handful of clients who have not initiated access to their portal. If this applies to you and you would like to utilize the Orion portal, please contact Tracey to begin the process.
- The link to access the Orion portal is good for only 24 hours. Please make your request at a time when you are able to follow through with the setup within a 24 hour window. If you make a request, but don't receive the link email, please check your spam/junk email folder.
- Quarterly reports will be uploaded to the Orion portal and you will receive an email notification to alert you. Those opting out of initiating access to their portal will receive reports by mail. The preferred method of delivery is the Orion portal and this is our effort to reduce our carbon footprint. Please consider assisting us in this effort.
- Please note that after 90 days of not accessing your Orion portal it becomes "inactive". This means that the password reset option will not work. Please contact Tracey to reactivate your portal and assist you in regaining access.
- The Orion portal has a very nice co-browse feature. If you are experiencing navigation issues, please contact Tracey to schedule a co-browse. Tracey can help you to better understand navigating the Orion Portal.
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It’s felt a bit like Groundhog’s Day most of this month. I am sure many can relate to this feeling! The first half of the month we were all focused on completing work related tasks and it seemed to go by in a blur. Last week was a bit of an adjustment with Bob and Tracey starting to finally work from home. A few new technical learning curves, but we adjusted pretty quickly. My routine has stayed pretty much the same as I am still coming into the office. There has been an enormous amount of information to digest lately on all fronts so a higher degree of time is being committed to work these days. Increased use of Face Time chats and Zoom with clients have carried over from March and expanded to a way of interacting with family and friends. Bob turned Tracey and I on to the House Party app and this has also been a fun way to stay connected. I have seen my grandchildren during drive-byes at their houses and I got the sense of what it may feel like to rob a bank (learning to wear my mask). This past week has been a bit more difficult with Gene’s brother's diagnosis of Covid-19 and he is back in the ICU as of this writing. I also had a pending sewer crisis that was averted. So now, every day seems to have an impactful change attached to it. It has been great to take walks with my dog, run and just be outside lately. I, along with their uncle, started a Zoom night-time story reading to the little ones. So fun to read Dr. Seuss and other children’s books. There’s a lot of wisdom in those simple stories! I’m a bit behind, but I’ve started planning my vegetable garden for this year. I just hope I can order seeds (many are gone) and the city is able to turn the water on at some point. Be safe and as always, you are in my thoughts.
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We have had an interesting April!! Christine is on week 5 and I’m on week 2 of working remotely. It has taken some getting used to, but is working well!
We celebrated Easter with a Live Stream Mass and then cooked a 22 lb. turkey with all the fixings!! We made up care packages and delivered them to our daughters Ashley and Brittany who were extremely excited to get some of my famous homemade stuffing! I’m quite certain that neither of the girls’ husbands got a chance at the stuffing!
We celebrated Christine's birthday on the 19
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with a small, socially distant, surprise party. It started with some of our friends calling in on “House Party” from our backyard. It didn’t take Christine long to recognize where the call was coming from. She was extremely surprised and excited to see friends face to face!
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The home renovation project has slowed to a crawl but not before the completion of the painting and trim. After only 40 days, the furniture has been returned to the space and we are enjoying the functionality of the room. We still have the fireplace facade and entryway floor replacement to finish.
We have decided to wait until mid May to make a decision about summer vacation. It is expected that the western states we plan to visit will be open. The question is whether these states will have quarantines in place for out of state visitors. We remain optimistic as we need something to look forward to at this juncture.
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Current Economic and Investment Information
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WILL THEY LOOK TO WASHINGTON FOR HELP? - 88% of more than 2,400 city officials across the USA anticipate the economic impact of the COVID-19 virus will result in budget shortfalls that will force them to reduce services and cut staff. The loss of sales tax and fee revenue occurred as businesses have closed and travel and tourism has disappeared (source: National League of Cities).
YOU GET A WHOLE ROW TO YOURSELF – 95,085 travelers went through TSA screening at US airports last Thursday 4/16/20, down 96% from the 2,616,158 screened passengers on Tuesday 4/16/19 or one year earlier(source: Transportation Security Administration).
IT’S RAINING NOW - All 50 US states maintain a “rainy day” fund that may be accessed as a result of an economic emergency. As of 7/01/19, California had $19.2 billion set aside, Texas had $7.8 billion, New York had $2.5 billion while Illinois had just $4 million(source: National Association of State Budget Officers).
STATES NEED HELP - The CARES Act includes $139 billion of relief for all 50 states. US governors have requested additional support of $500 billion from Congress (source: National Governors Association).
REAL NUMBER - The USA’s 3/31/20 unemployment rate is 4.4%, representing 7.1 million out-of-work Americans. But the government uses employment data collected only through the 12th of the month to compile the monthly jobless rate. Adding the number of workers who have filed for “first-time” unemployment benefits from 3/12/20 to 4/12/20 (a 4-week total of 22.0 million) to the 7.1 million individuals who were out of a job as of 3/12/20 suggests that 29 million Americans may now be out-of-work, equal to an 18% jobless rate (source: Department of Labor).
PEOPLE ARE NOT SPENDING - Retail sales in the United States in March 2020 declined 8.7%from the previous month to $483 billion. The worst month-over-month decline in retail sales during the 2008-2010 mortgage crisis was a drop of just 3.0%in December 2008 (source: Census Bureau).
AROUND THE GLOBE - The International Monetary Fund forecasted last week that the global economy will contract in 2020, rebound in 2021, and by 12/31/21 the economies of “most countries” around the world will be 5% smaller than the level they had previously reached as of 12/31/19 (source: Internal Monetary Fund).
THE DOCTOR WILL SEE YOU NOW - Just 1% of the US population is responsible for 22% of annual health care expenditures in the USA. At the other extreme, the 50% of the US population that utilizes the least amount of the health care system accounts for just 3% of annual health care expenditures in our country (source: Medical Expenditure Panel Survey 2017).
JUST MY CELL - 90 million landline phones in the United States have been eliminated in the last 20 years. There are 124 million households in the United States as of 12/31/19 (source: US Telecom).
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Can Things Get More Strange?
Peak Oil to Negative Oil
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If somebody had told you 15 years ago when oil prices were rising above $150 a barrel that oil producers would be paying storage companies good money to take oil off their hands, what would you have said? For that matter, what would you have said if somebody had told you these things a month ago?
The chart below shows the real, inflation-adjusted price of oil from 1870 to today, and what you see on the right side is a price collapse of unprecedented proportions. As pandemic-related lockdowns force factories to close and people to stop auto and air travel, global demand for oil has fallen by a shocking 29 million barrels a day. Oil exporters have reduced production, but not by nearly this degree, which means that, until Monday (April 20), they were selling the excess at below-extraction prices to anybody with the storage capacity to accept it. Storage capacity filled up rapidly, so that for a brief time, producers had to pay those who still had room in their storage facilities (via paying people to take their crude oil contracts) up to $40 a barrel to take the oil off their hands. Other producers are leasing tankers at high costs and storing oil at sea—reportedly paying $100,000 per day for each tanker.
Of course, oil does not actually have a negative worth, and the negative price concerned only contracts for delivery of barrels in May that are traded on the futures markets. Month-out futures contracts are selling at roughly $20 a barrel—suggesting that oil traders believe production will come back in line with demand. Crude exporters shut down 13% of the American drilling fleet, while Russia and the OPEC countries have agreed to reduce output by 9.7 million barrels a day. The White House has proposed paying U.S. fracking companies to keep their oil in the ground, but it can be costly to restart operations. A shut oil facility may be damaged permanently. About all the government can do, currently, is lease space for an additional 47 million barrels in the Strategic Petroleum Reserve.
This is obviously uncharted territory for the global economy and investment markets. Nobody seems to know what will happen except, perhaps, a tsunami of bankruptcies among oil drilling companies. The average price for a gallon of regular gasoline in the U.S. has fallen to $1.49, down a dollar from a year ago. Who today is filling up their tanks? Name brand companies like Exxon and Chevron are likely to see their oil revenue earnings continue to decline long-term. The oil and gas industry only makes up about eight percent of the U.S. gross domestic product—compared with 14 percent in the 1980s. The shock value of watching energy producers paying others to take oil off their hands could cause a temporary spike in stock market volatility among the startled herd of Wall Street traders, but for the rest of us, it’s back to social distancing, not driving much or flying, and watching with a bit of amazement as peak oil becomes negative oil: one more strange thing about this strange period in our lives.
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Spring Clean Your Finances
If there is an upside to COVID-19, it has reminded us that cleanliness and living a healthier life is important. Given the extra time we may be experiencing at home, now may be a golden opportunity to clean up our financial life and get your affairs in order.
There is no deadline date, such as April 15
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(most years), to focus on personal financial planning tasks. However, there may not be any better time than the present to start checking off a list of items related to your financial well-being! Action steps in this area of your life may help you to lower your stress level just knowing you are moving in a more positive direction towards your future financial security.
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13 Ways to Spring Clean Your Finances
By Jen Smith
DoughRoller
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Want a productive project to keep you busy while you self-quarantine? Here are 13 ways to spring clean your finances and help your money grow.
At least once a year I look down at the dust on my baseboards and try to think of the last time I cleaned them. Typically we wait until spring to clean the minutiae of our homes but in years you forget, you’ve got to get down on the floor and wipe your baseboards in the summer, fall or winter.The same goes for your finances. If you can’t remember the last time you “spring cleaned” your finances then don’t wait another season to get them in order.
How to Organize Your Finances for a Fresh Start
Not sure where to begin when organizing your financial life? Follow these 13 steps to get your money and finances sorted out.
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Most College Kids Won’t Get a Stimulus Check
It is not likely that those individuals age 17-24 who were claimed as a dependent will get a stimulus check of $1,200 payment or the $500 child bonus.
This has come as a surprise to both parents and students. Many young working adults in this category have found themselves out of jobs in recent weeks. They’re jobs are often service oriented or considered non-essential. Parents who have continued to support their children beyond the ages of 18 have also been puzzled by the age limits for dependents.
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Why millions of college students and young adults
won’t get a stimulus check
By Terry Nguyen
Vox
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Rachel Sherman lost her two streams of income seemingly overnight on March 19. California officials had implemented a statewide stay-at-home order, and the 23-year-old was working at a Los Angeles gym and restaurant — two nonessential businesses that were forced to close. Her two service jobs were helping to keep her afloat after her college graduation last May as she searched for career opportunities in journalism.
While Sherman filed for unemployment shortly after her layoffs in March, she was disheartened to realize she didn’t qualify for another form of financial relief — a $1,200 check as part of the federal government’s $2 trillion coronavirus stimulus package — because she was claimed as a dependent on her parents’ 2019 tax return.
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"An optimist is the human personification of spring. "
- Susan J. Bissonette
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Alexander Financial Planning
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1621 W. First Avenue
Grandview Heights, OH 43212
614-538-1600
Registered Investment Advisor
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This material is distributed by Alexander Financial Planning, Inc., (AFPI) and is for information purposes only. Although information has been obtained from sources to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of AFPI and are subject to change without notice. AFPI assumes no liability for the interpretation or use of this report. Financial planning, investment conclusions and strategies suggested in this report may not be suitable for all investors and consultation with a qualified advisor is recommended prior to executing any investment strategy. All rights reserved.
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© Alexander Financial Planning, Inc.
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