Provise Recognized
Financial Advisor Magazine has just released its 2024 ranking of Registered Investment Adviser firms based on assets under management. With just over $1.8 billion in assets under management as of 12/31/23, ProVise is ranked #212 nationally, #8 in Florida, and #1 in Tampa Bay. We thank each of you for placing your confidence in our ability to assist with your financial planning and investment management. We also want to recognize the entire ProVise team, who provide advice and excellent service to our family of clients every day.
Rate Cuts Coming…Yes
The Federal Reserve held rates at its meeting that concluded on Wednesday. In his press conference, Chairman Jerome Powell made it clear that the Fed is pleased with the rate of progress in pushing inflation down but still wants to see more data before making any rate cuts. He certainly set the stage for possible cuts in September, and the odds currently reflect the higher probability.
It is almost certain that they will cut the rate before the end of the year, but we question whether doing it in September will appear more political than financial. That is not to say they won’t do it; it’s just that the speculation will run rampant. So, from an investor’s point of view, what action should you be taking? Nothing different from what you have been doing.
If you are fully invested with a proper asset allocation, stay invested. If you have cash, add it to your portfolio, deploying the cash to rebalance the asset allocation. If you are just starting or have a large amount of cash, look to dollar-cost-average over the next 4 to 6 months by investing an equal amount of cash each month. If the market pulls back by more than 10% for some reason, consider doubling up.
The Magnificent 7 is Going for the Gold!
With the 2024 Summer Olympic games commencing, the Magnificent 7 might sound like Team USA’s Rugby squad. But it’s really seven of the world’s most valuable companies: Apple, Microsoft, Amazon, Google, Tesla, Nvidia, and Facebook. The Magnificent 7 comprise over 30% of the S&P 500 Index and are worth more than the combined value of the bottom 400 companies in the index. Any price movements within the Magnificent 7’s combined market value of $17 trillion can have an outsized impact on the value of the whole index. For instance, Nvidia’s year-to-date growth of 128% has accounted for over a third of the S&P 500 Index’s gains this year. Source: Fortune
However, too much market concentration may leave investors vulnerable to large losses should the fortunes of these few firms turn. Because many investors use an Exchange Traded Fund (ETF) that tracks the S&P 500 index as a passive investment strategy, too much growth within the Mag 7 can limit the benefits of diversification and ultimately increase risk. To avoid market concentration risk, it’s always a good idea to check the weights of the underlying holdings of an ETF before you begin investing.
Final Rules (For Now) on Inherited IRAs
In the good old days, when a beneficiary inherited an IRA, they could withdraw as much as they wanted, but they had a Required Minimum Distribution (RMD) based on their life expectancy. This was commonly referred to as a “Stretch IRA”.
However, the SECURE Act passed in 2019, effective January 1, 2020, changed the rules and future beneficiaries had to withdraw 100% of the account over 10 years. Beneficiaries received a lot of flexibility in how they took distributions. They could again take it all up front, they could take nothing out until the ten years were up, or anything in between.
Then, the IRS surprised beneficiaries with a twist—if the original IRA owner had begun taking RMDs, then the beneficiary had to continue to take an RMD every year for 10 years and still exhaust the account after 10 years. What an unexpected and huge curve ball—so much so that for the past four years, the IRS has waived this provision.
Effective next year, RMDs will be required for beneficiaries of an inherited IRA where the IRA owner had started RMDs. This is a classic example of an Executive branch agency interpreting Congress’ ambiguous and unclear legislative intent. The only way this gets fixed is an act of Congress.
Retirement Inflation is Different
We all have had to live with inflation the past couple of years, but for retirees, inflation comes in different flavors than it does for those who are still working. Social Security is adjusted for inflation each year, but the formula used generally understates the Consumer Price Index (CPI) and does not account for the unique price inflation for seniors.
According to the Senior Citizens League, today’s Social Security payments provide only 80% of the purchasing power of the 2010 levels. Goods and services are up 29% since 2010, while recreation and entertainment costs are up 45%. Medical costs are greater for seniors than the general population, up 50% over the same period. Food and beverage costs are up 56%, and housing costs have increased 81%. Communication costs are up 93%, with the average cost for an iPhone going from $200 to $800. Finally, transportation costs are up 96%. It is all a double whammy… 20% less purchasing power because Social Security did not keep up, and then all these increases on top of it all.
3 Ways to Lock in Lower Mortgage Rates
Between historically high home prices and elevated mortgage rates, buying a single-family home is at its most expensive level in more than 30 years. Home prices continue to rise due to a persistent housing shortage, and while many hope for a drop in mortgage rates, the decline may not be significant. The Mortgage Bankers Association expects mortgage rates to average 6.1% by the fourth quarter of this year.
To navigate these challenges, buyers are exploring three strategies to lower mortgage costs.
- Temporary mortgage buydowns, in which the seller or builder pays an upfront fee to temporarily reduce the buyer’s mortgage rate, are gaining popularity.
- The buyer purchases discount points by paying an upfront fee, which lowers the interest rate for the life of the loan.
- The buyer assumes the seller’s mortgage to benefit from a lower interest rate potentially.
However, these options come with caveats, such as the need for high credit scores, large upfront costs, and limitations on eligible mortgage types.
3 Ways to Lock In Lower Mortgage Rates, According to Experts – WSJ
Millionaires Galore
According to Forbes, as of April 2024, there are 2,781 billionaires worldwide, with many in the U.S. and China. How about the poor folks, those with only $1 million? According to a UBS global wealth report, the number of millionaires contracted by 3% in 2022 but increased by 4.2% in 2023. Switzerland, Luxemburg, Hong Kong, and the United States are the wealthiest countries per person. Where do the most millionaires live worldwide? Check the list of the top ten countries below:
10) South Korea – 1,295,674
9) Italy – 1,338,142
8) Australia – 1,936,114
7) Canada – 1,991,416
6) Germany – 2,820,819
5) Japan – 2,827,956
4) France – 2,868,031
3) United Kingdom – 3,061,553
2) Mainland China – 6,013,282
1) United States – 21,951,319
What are the Most Affordable Beach Towns for Retirees?
Those of us who live in the Tampa Bay area sometimes take the wonderful beaches surrounding us for granted. Some retirees prioritize affordable beach towns, and Realtor.com scoured U.S. Census records to come up with the following top ten list and median home prices:
10) Hudson, FL – $350,000
9) Venice, FL – $459,000
8) Arapahoe, NC – $342,000
7) Crystal River, FL – $369,900
6) Englewood, FL – $439,300
5) Grant Valkaria, FL – $497,500
4) Sunset Beach, NC – $339,900
3) Punta Gorda, FL – $429,000
2) Lillian, AL – $349,500
1) Calabash, NC – $367,100
Our Founder Recognized
Titan CEO and headline sponsor Enavate are pleased to announce Ray Ferrara, CFP®, Founder and Chair of ProVise Management Group, LLC, as a 2024 Tampa Titan 100. The Titan 100 program recognizes Tampa’s Top 100 CEOs and C-level executives. They are the area’s most accomplished business leaders in their industry, using criteria that include demonstrating exceptional leadership, vision, and passion. Collectively, the 2024 Tampa Titan 100 honorees and their companies employ over 55,000 individuals and generate over $24 Billion in annual revenues.
This year’s honorees will be recognized in a limited-edition Titan 100 book and profiled exclusively online. They will be honored at the annual awards ceremony on October 24, 2024, and will be given the opportunity to interact and connect multiple times throughout the year with their fellow Titans.
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