The Cox Connection

Vol 2 Issue 3 ||OCTOBER 2019

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IRA Early Withdrawals That Escape the 10% Tax Penalty

  1. Reimbursed medical care expenses for the owner, spouse, dependents or beneficiary that are less than 7.5% of adjusted gross income.
  2. Costs up to $10,000 directly related to the purchase of a principal residence (excluding mortgage payments).
  3. Tuition, related educational fees and room and board expenses for the owner, spouse, children, dependents or beneficiary.
  4. Payments necessary to prevent the eviction from the principal residence or foreclosure on the mortgage on that residence.
  5. Certain expenses to repair damage to a principal residence.
  6. Funeral expenses for the owner, spouse, children, dependents, or beneficiary.
  7. Disability as determined by a physician keeping the owner from being gainfully employed.
  8. Death of an account owner prior to age 59 1/2 allows the beneficiaries to take distributions without a penalty if they do not roll the assets into a beneficiary IRA.

Withdrawals taken from any IRA before age 59 ½ may be subject to a 10% federal income tax penalty. Hardship withdrawals qualify if the account owner's need can’t be relieved from other available resources. Please visit a tax professional for more information on tax deferred savings and retirement account distributions. Cox Global Associates is neither a tax or legal advisor. Source: https://www.irs.gov/newsroom/what-if-i-withdraw-money-from-my-ira

Market Update

Trade policies, oil, Fed rate cuts, and political drama continued to make the news but jobs are stable and economic activity remains positive. Stock and bond markets have both ended up positive for the third quarter and have offered very attractive results year-to-date. Here are some index results as of September 30, 2019:

  • S&P 500: YTD 20.55% and QTD 1.70%
  • Dow Jones Industrial Average:  YTD 17.51% and QTD 1.83%
  • MSCI EAFE (International Stocks): YTD 12.80% and QTD -1.07%
  • Bloomberg Barclays US Aggregate Bond: YTD 8.52% and QTD 2.27%
  • Bloomberg Barclays Global Aggregate ex US Bond: YTD 8.75% and QTD 2.59%

Aggregate bond returns, both domestic and foreign, continued providing positive total returns during the third quarter, but we have seen some changes in the domestic yield curve. Over the summer we witnessed long-term Treasury yields moving lower than short-term yields, in anticipation of the Fed cutting short-term rates. Because cutting short-term rates is a signal of a slowing economy, investors are seeing that as a warning to move into Treasury bonds which pushes bond yields even lower. Economic indicators shouldn't be taken lightly but certainly no one indicator should be looked at alone. There are a lot of mixed signals right now on whether a recession is in the near future. Staying invested for the long-term should be your key focus.

Over the last quarter we have seen the best performance in the stock market from consumer staples, real estate, and the utilities sectors. Year-to-date the top sector performer was technology, followed by real estate. With performance picking up in consumer staples and utilities we may be starting to see the stock market demand shifting to a more defensive focus and away from stocks that are more cyclical in nature; like technology.

Market participants are focused on negative indicators so investors should expect to continue to see some volatility going into the fourth quarter and even early 2020. We can help you review your portfolio for risk and make changes as needed to increase your comfort to avoid being out of the market.

If your situation has changed or you would just like to see how your accounts are doing, call us to schedule an appointment to review your portfolio, 281-395-8300. If you missed our current market webinar on September 26th, you can watch the replay here.

Total returns of the indices mentioned are provided by Morningstar. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information. Past returns are no indication of future results.

a properly positioned portfolio

Mutt vs Purebred

"It’s an age-old dispute: What’s better, a mutt or a purebred?"

"Mutts are much less susceptible to genetic disorders. Diversified portfolios are like mixed-breed mutts—they give you the benefits of their many components without the higher risk of the negatives of each individual breed. We do not want strategies that all go up in value together. We want strategies that respond to different economic stimuli and appreciate and depreciate at different times from each other,” says Jerry Wagner founder of Flexible Plan Investments.

No one knows where the market will take us in the next three, six, or twelve months. For that reason, it is so important that you have exposure to a variety of asset classes (like a mutt does breeds). Review your portfolio proactively so that you understand what you own and why you own it. This way, if the market is in a downturn you feel confident that you have positions that will keep your portfolio stable.

Another factor towards having a stable portfolio is to stay patient. A J.P. Morgan analysis showed that the period of time before a peak, looking at periods of 3, 6, 12, and 24 months, the S&P 500 provided more positive returns than the 3, 6, 12, and 24 month periods following the peak were negative. That means by staying invested for the long-term it doesn't matter when peaks and valleys in the market occur, you can achieve long-term growth despite timing those periods. Stay patient.

Sources: 1) Wagner, Jerry “Mutt vs. purebred: How should you invest?” Nov 9, 2016, UpClose, Proactive Advisor Magazine. 2) JP Morgan, Guide to the Markets, August 2019.


Our Take Aways this Quarter

Silver Watch: Harris County Precinct 5 announced a new senior citizen watch program where a senior, or concerned family members, can request weekly welfare checks. Learn more here.

Financial wellness of seniors is also important. The financial exploitation of seniors is on the rise. That is why we will ask, if you are over the age of 65, to provide a trusted contact person. We want to be sure our seniors are protected and knowledgeable about how to avoid scams.

Tropical Storm Imelda: Another storm has come through our community and surrounding communities bringing severe flooding and damage to buildings. Events like this remind us how important it is we have an emergency fund and the proper insurance to protect our belongings. Please consider having at least six months of expenses saved in an emergency fund for unexpected events like a hurricane or tropical storm.

Happy birthday to Jennifer Schneider in August and Don Cox in September. Small Cakes Cupcakery and Creamery, again, did not disappoint!

We hosted our first webinar in September to update you about the current market environment and the types of portfolio strategies we think can contribute to less worry. The replay is available here. Keep you eye out for upcoming webinars. Send any topic ideas or questions you may have to Jennifer at jschneider@coxglobalassociates.com.


October: 401(k) Plan Open Enrollment Meetings

October 14, 2019 Columbus Day

November 19, 2019 Client Appreciation Event - SAVE THE DATE!

November 28, 2019 Thanksgiving

December 22, 2019 Hanukkah begins

December 25, 2019 Christmas

stay informed

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Cox Global Associates, Inc. || 1260 Pin Oak Road, Suite 204 || Katy, TX 77494 || 281.395.8300 https://www.coxglobalassociates.com/ || info@coxglobalassociates.com

Securities and Advisory Services are offered through Geneos Wealth Management, Inc. FINRA, SIPC. Investment advisory services also offered through Cox Global Associates, Inc., A Registered Investment Advisor.