Broker Check

Monday Money Report

| August 09, 2021

We are continuing the bull run in equities, or stocks, as the S&P set yet another all-time high last week.  Despite concerns about the Delta variant, the economy is continuing to grow.  The jobs report showed that there were 943,000 jobs added in July, and the unemployment rate dropped to 5.4%, with both numbers beating expectations.

The slight increase in interest rates led bank stocks to increase, while tech stocks declined. With the increasing stability in the job market, the Federal Reserve Bank is expected to begin reducing its purchase of bonds.

If you are within five years of retirement and concerned about all these market highs, you might want to talk with your advisor about a variable annuity with a guaranteed income rider.  These insurance products typically provide a guarantee, backed by the claims-paying ability of the insurance company, to pay income every year based on the contract’s highest annual value. So if you start with $100,000 and the market drops 20%, you are still guaranteed income based on the $100,000.

There are lots of moving parts to these contracts, and they can be expensive – generally 1-2% higher annual costs than a regular investment account.  There are fee-based contracts available, which are sold by advisors who are acting as fiduciaries, versus commissioned products.  While every client is different, we generally don’t see the benefit in annuities for clients with a longer time before retirement, due to the higher fees.

If you decide you want to evaluate annuities, some things to compare are the fees for the contract itself, fees for the underlying investments, performance of the underlying investments, the income guarantees, and potential death benefits.  Be sure to ask if your advisor looked at multiple carriers, and why the one they recommend was chosen over the others.

You action this week is to check your credit report.  Many banks and credit cards offer free credit score monitoring.  Take advantage of this and watch your score.    

We have a few spots left in our financial literacy class this week, geared for older high school student and younger college students. Check out our website at and our Facebook page for more information.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. 

Fixed and variable annuities are suitable for long-term investing, such as retirement investing. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Guarantees are based on the claims paying ability of the issuing company. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply. Variable annuities are subject to market risk and may lose value.

This information is not intended to be a substitute for specific individualized tax advice.

The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.