20
Financial Resolutions for
2020
Frontier Wealth Management is a private wealth advisory practice that uses a team-centric approach to create comprehensive solutions tailored to our clients’ goals. With resolute focus on our Core Values, we act in our clients’ best interests to simplify complexities, maximize opportunities and create a plan that empowers them with confidence throughout their financial journey.
TRANSPARENT Clear, Open, Accountable
ENGAGED Connected, Collaborative, Committed
RESOURCEFUL Competent, Innovative, Imaginative
ADVOCATES Believers, Supporters, Champions
We are authentic in our approach; you will always know the what, why and how.
We are here to serve you. Together, our success is based on clear, open and honest communication.
Through collaboration, we leverage our in-house expertise to develop a unique path toward your financial success.
We strive to understand your financial goals and personal aspirations, enabling us to become your trusted advisors.
WINTER 2020
8
4 4
ON THE ECONOMIC FRONTIER: Stock market soars: Economy is red hot heading into a new year and decade
8
20 FINANCIAL RESOLUTIONS FOR 2020 In recognition of the dawn of the ‘20s, here are 20 financial resolutions for the year 2020
12
FROM THE SPECIALISTS
15
NEWS & NOTES
15
NEW! CYBER SECURITY CORNER
12
Five tips to help with tax preparation this year
News and updates from the Frontier offices
Helpful security tips
15
ON THE ECONOMIC FRONTIER
STOCK MARKET SOARS: ECONOMY IS RED HOT HEADING INTO A NEW YEAR AND DECADE STOCK MARKET SOARS
gained 22.3%. But the Nasdaq composite index
The U.S. economy appears to be firing on all
bested them both, soaring by 35.3%. The Nasdaq
cylinders as we head into the new year and the
was powered by technology stocks, which rose
decade of the ‘20s. Let’s start with the performance
by 48% last year. Tech bell-weathers Apple and
of the stock market, which typically gets most of
Microsoft each now have a market cap exceeding
the economic headlines.
$1.2 trillion.
In 2019, the U.S. stock market enjoyed its best
This performance might have been hard to
year since 2013. The S&P 500 Index gained 28.9%
imagine one year ago when the S&P 500 finished
last year while the Dow Jones Industrial Average
2018 down nearly 20% in the fourth quarter and
4 | WINTER 2020
FRONTIER WEALTH MANAGEMENT
all the talk was about a recession in the new year. But markets came roaring back in January when the Federal Reserve indicated that it would be
Sure enough, the Fed ended up
patient when it came to increasing interest rates
cutting interest rates three times last year in what
further in the new year.
it deemed a pre-emptive strike against a slowing
Sure enough, the Fed ended up cutting
global economy and any economic damage from
interest rates three times last year in what it
the U.S.-China trade war. These were the first
deemed a pre-emptive strike against a slowing
interest rate cuts in more than a decade, setting
global economy and any economic damage from
the stage for a strong finish to the year.
the U.S.-China trade war. These were the first interest rate cuts in more than a decade, setting the stage for a strong finish to the year. There were dips along the way, but each time,
President Trump is expected to travel to
the stock market responded with another strong
Beijing soon to discuss the specifics of Phase
upswing. The S&P 500 set a new record high 35
2 of the agreement. The U.S. has retained 25%
times last year, while the Nasdaq set 31 records
tariffs on $250 billion worth of Chinese imports
and the Dow set 22 records. The S&P 500 gained
as what the President has called “leverage”
13% on an annualized basis during the decade of
during the Phase 2 negotiations. The Phase 1
the ‘10s while the Dow rose more than 170% as
agreement doesn’t address China’s cybertheft
the longest-running bull market in U.S. history
and intellectual property theft practices that the
kept powering forward.
Trump administration has long objected to. The other big news on the trade front is the
TRADE WAR TRUCE
finalization in December of the United States-
Many investors breathed a sigh of relief when a
Mexico-Canada Agreement (USMCA), a new
temporary truce in the 17-month U.S.-China trade
trade agreement between these nations that
war was announced in mid-December. In Phase
replaces the 25-year-old North American Free
1 of a new trade deal that was signed on January
Trade Agreement (NAFTA). The U.S. House of
15, the U.S. cancelled plans to impose new tariffs
Representatives approved the USMCA quickly
on $156 billion worth of Chinese imports while
and the Senate is expected to vote on and approve
agreeing to cut existing tariffs on $120 billion in
it soon.
Chinese goods in half on September 1 — from 15%
The economic impact of the new trade deal
to 7.5%. In return, China has committed to buying
is relatively minor. For example, it’s expected
more agricultural and manufacturing products
to add 176,000 U.S. jobs over the next six years
from U.S. businesses while also lowering existing
while boosting economic growth by $68 billion
tariffs and cancelling plans for new tariffs.
and gross domestic product (GDP) by 0.35%. But
WINTER 2020 | 5
THE 2010s: THEN AND NOW
many believe that it represents a big political win for President Trump entering this election year. The USMCA is expected to primarily benefit U.S.
As we enter a new decade, it’s instructive to take a look back and compare some key economic indicators then and now. For example:
2009
2019
10%
3.5%
JOBLESS CLAIMS
432,000
222,000
OIL
$80/ BARREL
$60/ BARREL
10-YEAR TREASURY
3.8%
1.9%
DOW JONES INDUSTRIAL AVERAGE
10,428
28,463
UNEMPLOYMENT RATE
It’s also fun to look at how far technology has come over the past decade. For example, Apple started selling the iPhone 3GS in 2009, which had 3.5-inch screen with a 480-by320 display. The iPhone 11 Pro has a 5.8-inch screen with a 2,436-by-1,125 display and facial recognition. A decade ago, Netflix had just started streaming movies and most people still watched DVDs. The same goes for music streaming — Spotify launched in 2008 while most people were still listening to CDs or downloading songs off iTunes and listening to them on their iPods. All of this begs the question: What will technology look like in 2030?
6 | WINTER 2020
agricultural exporters, data-intensive Internet businesses and manufacturers. And the AFL-CIO, which typically opposes trade deals, supports the USMCA.
GROWTH AND EMPLOYMENT ARE SOLID The U.S. economy grew at an annual rate of 2.1% during the third quarter of last year, which was up slightly from 2.0% growth during the second quarter, according to the Bureau of Economic Analysis.
The
longest-running
economic
expansion in U.S. history has now reached a record 126 months, and the economy avoided a recession for an entire calendar decade for the first time ever. There are several reasons why this expansion has lasted so long, say economists. For starters, the economy was rebounding from such a low point after the Great Recession that it has spent the past decade making up lost ground. Economic stimulus action taken by policymakers during the financial crisis, such as quantitative easing (QE) and the Troubled Asset Relief Program (TARP), was also a big factor. Low interest rates and inflation have also played a role, as has the ongoing memory of the crisis in the minds of many businesses and consumers who have become more risk-averse. So how much longer can the expansion last? There’s a saying that expansions don’t die of old age — instead, they end because of bad policy
FRONTIER WEALTH MANAGEMENT
decisions. In one poll of economists conducted in
a year ago. And the number of jobs posted rose
December, the odds of a recession in 2020 were
3.3% to about 7.3 million, a historically high
set at 33%, or one out of three. Meanwhile, the
level. In fact, there are now more job openings
Conference Board is forecasting GDP growth of
than unemployed individuals. Wages are also up
2.3% for 2019 and 2.0% in 2020. Both of these
2.9% from a year earlier.
are down from GDP growth of 2.9% in 2018.
Manufacturing is another indicator to watch
Unemployment is one of the best indicators
and this is currently flashing some warning
of economic performance, and on this front, the
signs. The manufacturing industry has been
news appears to be very good. In December, the
especially hard hit by the U.S.-China trade war
jobless rate remained 3.5%, its lowest level in half
because tariffs increase manufacturers’ costs for
a century. Job gains were strong, with 145,000
imported parts while reducing their access to
jobs added during the month on top of upward
foreign markets.
revisions of the 266,000 jobs that were added in
The Institute for Supply Management’s
December. Employers have now added jobs every
manufacturing index has fallen for four straight
month for a record 10 straight years. An total of
months, culminating with a drop from 48.1% in
2.11 million new jobs were added to the economy
November to 47.2% in December — its lowest
in 2019.
level since 2009. A reading below 50% indicates that manufacturing activity in the U.S. is contracting. It’s important to note, however, that manufacturing doesn’t have nearly the impact on
The ‘20s appear to be off to a roaring
the U.S. economy that it used to. For example,
start, but there’s still a lot of uncertainty to
manufacturing accounts for just 8% of American
deal with — starting with the Presidential
jobs today, compared to 32% of jobs in 1953, and
election this year.
just 11% of GDP, compared to 28% of GDP in 1953.
Digging
deeper
into
the
employment
A ROARING START
statistics, 460,000 fewer people are working
The ‘20s appear to be off to a roaring start, but
part-time for economic reasons than a year ago.
there’s still a lot of uncertainty to deal with —
More than 80% of part-timers choose to do so
starting with the Presidential election this year.
for noneconomic reasons — or in other words,
If the past decade taught us anything, however,
because they don’t have to work full-time. The
it’s the importance of remaining focused on the
number of people able to work who aren’t looking
long term and not overreacting to short-term
for a job fell by 432,000, which is 27% lower than
economic and market fluctuations.
u
WINTER 2020 | 7
20
Financial Resolutions for
2020
8 | WINTER 2020
FRONTIER WEALTH MANAGEMENT
M
any people make New Year’s resolutions related to their finances at this time of year in an effort to start the new year off well. This year presents a unique opportunity to start off not just a new year, but a new decade on the right financial foot. In recognition of the dawn of the ‘20s, here are 20 financial resolutions for the year 2020:
1
Set financial goals. This is the perfect
time to set financial-related goals for the new year and decade. For example, do you want to save up for a down payment on
Sit down with your spouse now and
a home? Pay down debt? Start a college
decide which of these resolutions could help
savings fund? Contribute more toward your
you improve your personal finances in 2020.
retirement? Set specific and measurable goals in these areas and write them down so you can refer back to them throughout the year.
If expenses exceed income, look for areas
2
Keep track of your spending. Choose
to trim. If income exceeds expenses, decide
a month and write down every dollar you
how to save or invest the excess.
spend on everything. Many people are shocked when they realize how much money they spend on non-essential items like eating out, going to concerts and movies,
3
4
Eliminate
bad
financial
habits.
Whether it’s buying five-dollar lattes every morning, eating lunch out every
and splurging on fancy coffee. Then make
day or overspending on designer clothing
a plan for reducing wasteful and frivolous
or shoes, you might have some spending
spending this year.
behaviors that are hurting you financially. Identify these now and vow to cut back on
Create a budget. This is one of the best ways to cut down on wasteful spending. Add up all of your fixed expenses each month (such as your rent or mortgage, utilities, insurance, car payment and food) and compare this to your total monthly income.
them this year.
5
Perform regular home maintenance tasks. Having your heating and air conditioning units serviced and your gutters
cleaned
on
a
regular
basis
WINTER 2020 | 9
can prolong the life of these vital
report each year from each of the three
home appliances and help you avoid
major credit reporting bureaus (Equifax,
costly repairs.
Experian and TransUnion) by visiting AnnualCreditReport.com. This enables
6
Build up a “rainy day” savings account. It’s often a good idea to save between three and six months’ worth of living expenses in a liquid savings account, such as a bank savings or money market account. This way, you’ll have enough
7
you to monitor your credit once every four months in search of suspicious activity.
10
Estimate how much money you’ll need to retire. Using an online calculator like the one provided by Financial Finesse,
money to cover unexpected expenses like
you can determine what your income
major home or car repairs or hold you over
needs could be in retirement and whether
during a job loss.
you’re currently on track to save this much money.
Max
out
contributions
to
your
retirement savings account. This is especially true if your employer matches your contributions. In 2020 you can
8
9
11
Open and contribute to a Roth IRA. These offer a major advantage over traditional IRAs: Funds can be withdrawn
contribute up to $6,000 to your IRA, or
tax-free in retirement. This can help you
$7,000 if you’re 50 years of age or over,
stretch your retirement nest egg even
as well as up to $19,500 to your 401(k), or
further. Also, you can withdraw principal
$26,000 if you’re 50 years of age or over.
(but not earnings) at any time and for any reason without paying taxes or penalties.
Pay off credit card debt. Carrying credit card balances with double-digit
Open and contribute to a health
interest rates is one of the biggest
savings account (HSA). This is a great
obstacles to meeting long-term financial
way to save money for out-of-pocket
goals. Resolve now to pay off all of your
medical expenses in a tax-advantaged
credit card debt by the end of this year —
way. In 2020 you can contribute up to
and then to pay your credit card balances
$3,550, or $7,100 for your entire family,
in full each month going forward.
to an HSA.
Monitor your credit report. You can obtain a free copy of your credit
10 | WINTER 2020
13
Start saving for college education expenses. Section 529 plans are one of
FRONTIER WEALTH MANAGEMENT
the most popular college savings vehicles available to parents today. Your money will grow on a tax-deferred basis and
14
17
estate
planning
documents. Look at your last will and testament, advance health care directive and durable power of attorney to see if any
free as long as funds are used to pay for
changes in your life circumstances (such
qualified education expenses.
as a divorce or birth of a child) warrant updating them. If you don’t have these
Diversify your investment portfolio.
documents, get them drafted as soon as
Ideally,
possible.
your
portfolio
should
be
comprised of a mix of assets from the and cash equivalents — based on your investment goals, time horizon and level of
18
risk tolerance.
Educate yourself financially. There is a wealth of useful financial information at your fingertips if you do a little digging. This includes books, websites, magazines and podcasts.
Lower investment costs. One study* found that expense ratios, transaction costs and load fees are a more reliable indicator of fund performance than past
16
your
withdrawals are made tax- and penalty-
three main asset classes — stocks, bonds
Update
19
Plan charitable giving strategically. Instead of just giving money away haphazardly when you feel like it, create
performance or fund ratings. Index funds
a strategic charitable giving plan that
help lower investment costs by tracking a
maximizes the tax benefits of giving.
market index (like the S&P 500) instead of
Consider giving away a percentage of
trading actively.
your pre-tax income each month so you can help the causes you believe in on a
Re-examine coverage.
your Make
sure
insurance that
your
homeowners coverage limits are adequate for the current value of your home and all your possessions. And if you haven’t
consistent basis.
20
Create your financial “dream team.” This should generally include a financial advisor,
CPA,
insurance
agent
and
shopped your car insurance in awhile, now
attorney. Make sure your financial advisor
might be a good time to do so and possibly
is a fiduciary, which means he or she is
save some money in premiums.
legally required to make recommendations that are in your financial best interests, not his or hers.
u
WINTER 2020 | 11
from the specialists
FIVE TIPS TO HELP WITH TAX PREPARATION THIS YEAR
T
he IRS recently announced that January 27
a procrastinator who waits until the last minute,
was the official first day of the tax season
now is a good time to start preparing. Here are
for this year. In other words, that was the
five things you can do to make the tax filing
first day that you can file your 2019 tax return.
process go smoother this year.
The deadline for filing your 2019 return is April 15, which falls on a Wednesday this year. So this
1. Pull out last year’s tax return. This can
means you’ve got a window of approximately 11
serve as a good refresher of the documents
weeks to file your return.
and paperwork you used when filing last year.
START PREPARING NOW
It also includes standard information you’ll need such as Social Security numbers and
Regardless of whether you’re an early bird who
other personal information for yourself, your
likes to get your taxes done as soon as possible or
spouse and your dependents and bank account numbers so you can receive your refund via
$14.6 billion...
Total amount refunded to taxpayers earning $250k to $500k for tax year 2018. (MarketWatch)
direct deposit. 2. Gather income documents. These will detail all the taxable income you earned last year. For most people they include: • W-2 forms substantiating wage income.
12 | WINTER 2020
FRONTIER WEALTH MANAGEMENT
• 1099
forms
detailing
income
from
• Charitable contributions (statements from
freelance work (1099-MISC), interest
charities or cancelled checks)
(1099-INT), dividends (1099-DIV) and
• Medical bills (itemized receipts)
broker or barter exchange transactions (1099-B). •
Schedule K-1 that reports each partner’s share of earnings, losses, deductions and credits from a partnership.
• Form SSA-1099 listing Social Security income.
$2,879... Average refund that taxpayers who filed as of late May 2019 got from 2018 taxes. (The Wall Street Journal)
4.
Gather documents substantiating
tax payments. If income taxes are withheld from your gross pay each pay period, the total amount of income taxes you paid during the year will be included on Form W-2. But if you’re self-employed and made quarterly estimated tax payments during the year, make sure you track down this documentation so you can substantiate these payments to the IRS. 5.
Gather documents related to self-
employment income. If you are self-employed or run a freelance, contracting or consulting 3. Organize documents substantiating deductions and credits. Tax deductions can reduce your taxable income, thus lowering your overall tax liability. You must itemize deductions on Schedule A when filing your return to benefit from most, but not all, deductions. Tax credits are even better — they reduce your tax
business on the side, you may need to file Schedule SE along with Form 1040 to report your self-employment income. Each client from whom you earned at least $600 last year is required to send you a 1099-MISC form detailing how much money they paid you. Note, however, that if a client didn’t send you
liability dollar-for-dollar. You should gather documentation to substantiate deductions and credits like: • Contributions to retirement plans (Form W-2) • Educational expenses (Form 1098-T) and student loan interest (Form 1098-E) • Mortgage interest and property taxes
63... Percentage of affluent Americans
who said they were very or somewhat likely to change their personal financial plans based on the new federal tax law. (AICPA)
(Form 1098) •
State and local taxes paid (Form W-2)
WINTER 2020 | 13
throughout the year so you can easily access
Two-thirds...
Number of households that received tax cuts under the Tax Cuts and Jobs Act. (The Wall Street Journal)
them at tax time. For many self-employed individuals
these
include
computers
and
software; office furniture and equipment; advertising and marketing expenses; vehicles and miles driven for work; and travel, meals and entertainment related to the business (up to certain limits).
FILE YOUR RETURN ELECTRONICALLY a 1099-MISC form, this doesn’t mean you don’t
The IRS encourages all taxpayers to file their
have to report that income. Therefore, you should
returns electronically and choose direct deposit
keep careful records and documentation of all
of their refund in order to expedite processing
self-employment income you earned throughout
and receive refunds faster. This option is “fast,
the year.
accurate and the best way to get your refund
Also keep records and receipts of all deductible business expenses you incurred
14 | WINTER 2020
as quickly as possible,” said IRS commissioner Chuck Rettig in a statement.
u
FRONTIER WEALTH MANAGEMENT
news & notes
WELCOME TO THE TEAM!
NEW CLIENT PORTAL
T
W
e are excited to announce the addition of a new Operations Associate to our Kansas
he new Frontier client portal is now live and
City office: Sean Ryan. Sean
the feedback has been positive. The Frontier
joined Frontier with over
client portal will display all of your accounts in a
10 years’ experience in the
consolidated manner and give you insight into key
financial services industry.
metrics. You will also be able to securely send and
He has focused on financial
receive documents with us. If you haven’t signed
technology for a variety of
up for the new client portal, please reach out to
companies in the Kansas City area for the majority
your Advisor or CSS for access. Also, don’t forget
of that time. Graduating with a degree in finance
to download our mobile app at the Apple App Store
from the University of Kansas, Sean brings a unique
and Google Play Store, which can be found by
mix of expertise in both finance and technology to
searching “Frontier Wealth.”
his role as an Operations Associate at Frontier. u
cyber security corner
TIPS TO KEEP YOU PROTECTED IN THIS DIGITAL AGE!
USE CAUTION WITH USB DRIVES USB Drives are a great way to store and transfer data
quickly
and
easily
between
devices.
Unfortunately, many of their benefits create some major security concerns we all should be aware of. • Never use a random drive you have not purchased yourself. • Take advantage of security features such as passwords and encryption on your USB drives.
ROBO-CALL SCAMS We’ve all undoubtedly received a robo-call at
member or friend’s name. • Limit the amount of information you are sharing on social media.
FINANCIAL SCAM AWARENESS We all would go to great lengths to protect our personal information and our hard-earned money. Unfortunately, scammers are using this awareness to play off our fears and trick victims into providing some of our most personal information. • Scammers
can
create
some point in our lives. In most cases, these are
phishing emails to look
easy to spot, but new and more sophisticated
identical to your bank or
tricks by these scammers are making them much
credit card company’s emails.
more convincing. • Beware of text alerts that mention a family
• Avoid providing sensitive information on a call you didn’t initiate.
u
WINTER 2020 | 15
The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier") investment advisory services and general economic conditions are as of December 31, 2019. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this newsletter is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.
KANSAS CITY 4435 Main Street, Suite 650 Kansas City, MO 64111 815.753.5100
DENVER 10375 Park Meadows Drive, Suite 500 Lone Tree, CO 80124 303.770.0154
ST. LOUIS 1401 S. Brentwood Boulevard, Suite 925 St. Louis MO 63144 314.762.6800
WICHITA 1625 N. Waterfront Parkway, Suite 150 Wichita, KS 67206 316.689.8333
ALBANY 515-B1 N. Westover Boulevard Albany, GA 31707 229.888.5346