July 18, 2024 • 10 mins
Welcome to the quarterly retirement plan update with Gordon Asset Management. In today's episode, Todd Zempel will recap the first half 2024 market performance and discuss the retirement plan provisions most likely to be adopted by plan sponsors according to PlanSponsor.com.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 2 (00:09):
Welcome to the Gordon Asset Management Podcast.
On today's show, your host,Todd Zempel, will review market
performance through the firsthalf of 2024, as well as cover
the latest updates oncorporate-sponsored retirement
plans.
Please tune in to the End forimportant information and
disclosures about our firm.
Speaker 1 (00:29):
Welcome to the show.
This is your host, Todd Zempel,partner and director of
Retirement Plan Services.
We have a great show lined upfor you.
Today.
There is a lot to report on inthe world of investments and
retirement plans, so, withoutany further ado, let's jump
right in.
As of June 30th 2024, the stockmarket, as represented by the
(00:53):
S&P 500 index, has shown arobust year-to-date performance,
with a total return in excessof 15%.
This growth has been driven bysignificant gains in the
technology and consumerdiscretionary sectors.
Despite a volatile economicenvironment marked by
fluctuating interest rates,geopolitical tensions and
(01:16):
politics, the stock market hascontinued its upward trajectory.
The technology sector has onceagain taken the lead, with
companies like NVIDIA and Appledriving substantial gains.
Nvidia, in particular, has beena standout performer due to its
strategic position in the AIand semiconductor markets.
(01:37):
Many view NVIDIA as the picksand shovels play in the tech
sector.
For those who may not befamiliar with that analogy,
think of NVIDIA as a businessthat sells mining equipment.
During a gold rush, Some minersmay strike it rich, many won't,
but you can rest assured thatthose selling the shovels will
(01:57):
have the most reliable profits.
In the consumer discretionarysector, companies like Amazon
have shown robust performance.
Amazon's expansion into newmarkets and continuous
innovation in e-commerce andcloud computing have bolstered
its stock price.
Turning to fixed income, thebond market has seen varying
(02:17):
performance across differentsegments.
Through June 30, 2024, theBloomberg US Aggregate Bond
Index has experienced losses of0.71%.
On the other hand, theBloomberg US High Yield Index
has performed better, showingreturns of approximately 4.5%.
(02:38):
Interest rates have been asignificant factor influencing
fixed income performance.
A significant factorinfluencing fixed income
performance.
The Federal Reserve's monetarypolicy has seen several rate
hikes aimed at curbing inflation, pushing the benchmark interest
rates higher.
As of June 2024, the yield onthe 10-year US Treasury note has
(02:58):
risen to about 3.5%, reflectingmarket expectations of
continued economic growth andinflationary pressures.
It's important to understand theinverse relationship between
interest rates and bond prices.
When interest rates rise, bondprices typically fall.
This is because the fixedinterest payments of existing
(03:20):
bonds become less attractivecompared to the new bonds issued
at higher rates.
Bonds become less attractivecompared to the new bonds issued
at higher rates.
Conversely, when interest ratesfall, bond prices generally
increase as the older bonds withhigher rates become more
valuable.
With that in mind, as manyanalysts are anticipating the
Fed to start cutting interestrates in September, it is
(03:42):
possible we could see somepositive momentum in FIX later
this year.
Here's a quick overview ofother key indices' year-to-date
performance.
Small caps, as represented bythe Russell 2000 Index, are up
1.73%, the MSCI Emerging MarketsIndex experienced a 7.68% gain,
(04:05):
the Bloomberg Commodity Indexput up a 5.14% return and the
tech-heavy NASDAQ, led by stockslike NVIDIA, is up over 18%.
Looking ahead, the upcomingpresidential election is a
significant event that couldimpact the markets.
Historically, elections haven'tmattered all that much for
(04:28):
markets over the longer term.
Elections haven't mattered allthat much for markets over the
longer term.
However, markets tend toexperience heightened volatility
in election years as investorsreact to the uncertainty and
potential policy changes.
As of the date of thisrecording, July 18th 2024, we've
already seen an assassinationattempt on former President
Trump and a crescendo of voiceson the left calling for Biden to
(04:52):
step aside.
Not to mention Biden justcanceled several events as he
isolates with COVID.
Despite this, the markets havebeen surprisingly complacent as
investors come to terms with alikely Trump victory.
Personally, I'm not buying it.
I find it hard to believe theDemocrat Party will nominate the
oldest and one of the leastpopular presidential candidates
(05:15):
of all time.
I suspect political operativeshave been working on an ideal
replacement for months.
Though we all may disagreeabout politics, I think we can
all agree that this season ofthe Presidential Reality Show
has been one of the mostgloriously entertaining train
wrecks in recent memory.
Switching gears.
(05:35):
Let's now discuss the latestdevelopments in
corporate-sponsored retirementplans.
According to a recent articlefrom Plansponsorcom, plan
sponsors are increasinglylooking to adopt several key
provisions of the SECURE 2.0 Actto enhance their retirement
offerings.
Here are the top fiveprovisions, ranked from highest
(05:58):
to lowest, based on expected use.
The top provision, with thehighest expected adoption rate
of about 60%, is the IncreasedSpecial Catch-Up Contribution
Limit for participants aged 60through 63.
This provision allows olderemployees to contribute
additional amounts beyond thestandard contribution limits to
(06:19):
their retirement accounts.
It recognizes that individualsnearing retirement may need to
accelerate their savings effortsto ensure a more secure
financial future.
Coming in second, with about 55%of plan sponsors likely to
adopt, is the self-certificationof hardships and unforeseeable
(06:39):
emergency distributions.
This provision simplifies theprocess for employees to access
their retirement funds in timesof financial need.
Instead of going through alengthy and often cumbersome
verification process, employeescan self-certify their
eligibility for a hardshipwithdrawal.
Third on the list, with nearly50% expected adoption is the
(07:04):
provision allowing withdrawalsfor federally declared disasters
.
This enables employees toaccess their retirement savings
during times of naturaldisasters or other federally
recognized emergencies,providing much-needed financial
relief.
The fourth most likelyprovision to be adopted at
around 45% is eligibledistributions for domestic abuse
(07:27):
victims.
This important provision allowsindividuals facing domestic
abuse to withdraw from theirretirement accounts to cover
expenses related to escapingtheir situation, such as
relocation costs, legal fees andmedical expenses.
Finally, the fifth provisionwith an expected adoption rate
(07:49):
of about 40% is withdrawals foremergency expenses.
This allows employees to tapinto their retirement funds for
unforeseen financial emergencies, such as car repairs,
unexpected medical bills orurgent home repairs or urgent
home repairs.
By permitting these withdrawals, employers help their employees
(08:15):
manage sudden financial burdenswithout resorting to
high-interest loans or creditcard debt.
In essence, it turns theretirement plan into a piggy
bank.
As you can guess, I'm not a hugefan of this provision.
That wraps up our mid-year 2024update.
I hope you found these insightsvaluable.
Remember, staying informed andproactive about your finances is
(08:39):
key to achieving your long-termgoals.
For more detailed analysis andpersonalized advice, feel free
to reach out to us atwealthqbcom or email us at info
at wealthqbcom.
Thanks for tuning in and we'llsee you in the next episode of
the Gordon Asset ManagementPodcast.
Stay smart and stay invested.
Speaker 2 (09:03):
Gordon Asset Management LLC is a registered
investment advisor.
Opinions expressed in this showare those of the speaker and do
not necessarily reflect theopinions of Gordon Asset
Management LLC.
All statements and opinionsexpressed are based upon
information considered reliable,although it should not be
relied upon as such.
Any statements or opinions aresubject to change without notice
(09:25):
.
Information presented is foreducational purposes only and
does not intend to make an offeror solicitation for the sale or
purchase of any specificsecurities, investments or
investment strategies.
Investments involve risk and,unless otherwise stated, are not
guaranteed.
Past performance is notindicative of future performance
(09:46):
.
Information Express does nottake into account your specific
situation or objectives and isnot intended as recommendations
appropriate for any individual.
Listeners are encouraged toseek advice from a qualified tax
, legal or investment advisor todetermine whether any
information presented may besuitable for their specific
situation.
(10:06):
You
Welcome to the Gordon Asset Management Podcast.
On today's show, your host,Todd Zempel, will review market
performance through the firsthalf of 2024, as well as cover
the latest updates oncorporate-sponsored retirement
plans.
Please tune in to the End forimportant information and
disclosures about our firm.
Speaker 1 (00:29):
Welcome to the show.
This is your host, Todd Zempel,partner and director of
Retirement Plan Services.
We have a great show lined upfor you.
Today.
There is a lot to report on inthe world of investments and
retirement plans, so, withoutany further ado, let's jump
right in.
As of June 30th 2024, the stockmarket, as represented by the
(00:53):
S&P 500 index, has shown arobust year-to-date performance,
with a total return in excessof 15%.
This growth has been driven bysignificant gains in the
technology and consumerdiscretionary sectors.
Despite a volatile economicenvironment marked by
fluctuating interest rates,geopolitical tensions and
(01:16):
politics, the stock market hascontinued its upward trajectory.
The technology sector has onceagain taken the lead, with
companies like NVIDIA and Appledriving substantial gains.
Nvidia, in particular, has beena standout performer due to its
strategic position in the AIand semiconductor markets.
(01:37):
Many view NVIDIA as the picksand shovels play in the tech
sector.
For those who may not befamiliar with that analogy,
think of NVIDIA as a businessthat sells mining equipment.
During a gold rush, Some minersmay strike it rich, many won't,
but you can rest assured thatthose selling the shovels will
(01:57):
have the most reliable profits.
In the consumer discretionarysector, companies like Amazon
have shown robust performance.
Amazon's expansion into newmarkets and continuous
innovation in e-commerce andcloud computing have bolstered
its stock price.
Turning to fixed income, thebond market has seen varying
(02:17):
performance across differentsegments.
Through June 30, 2024, theBloomberg US Aggregate Bond
Index has experienced losses of0.71%.
On the other hand, theBloomberg US High Yield Index
has performed better, showingreturns of approximately 4.5%.
(02:38):
Interest rates have been asignificant factor influencing
fixed income performance.
A significant factorinfluencing fixed income
performance.
The Federal Reserve's monetarypolicy has seen several rate
hikes aimed at curbing inflation, pushing the benchmark interest
rates higher.
As of June 2024, the yield onthe 10-year US Treasury note has
(02:58):
risen to about 3.5%, reflectingmarket expectations of
continued economic growth andinflationary pressures.
It's important to understand theinverse relationship between
interest rates and bond prices.
When interest rates rise, bondprices typically fall.
This is because the fixedinterest payments of existing
(03:20):
bonds become less attractivecompared to the new bonds issued
at higher rates.
Bonds become less attractivecompared to the new bonds issued
at higher rates.
Conversely, when interest ratesfall, bond prices generally
increase as the older bonds withhigher rates become more
valuable.
With that in mind, as manyanalysts are anticipating the
Fed to start cutting interestrates in September, it is
(03:42):
possible we could see somepositive momentum in FIX later
this year.
Here's a quick overview ofother key indices' year-to-date
performance.
Small caps, as represented bythe Russell 2000 Index, are up
1.73%, the MSCI Emerging MarketsIndex experienced a 7.68% gain,
(04:05):
the Bloomberg Commodity Indexput up a 5.14% return and the
tech-heavy NASDAQ, led by stockslike NVIDIA, is up over 18%.
Looking ahead, the upcomingpresidential election is a
significant event that couldimpact the markets.
Historically, elections haven'tmattered all that much for
(04:28):
markets over the longer term.
Elections haven't mattered allthat much for markets over the
longer term.
However, markets tend toexperience heightened volatility
in election years as investorsreact to the uncertainty and
potential policy changes.
As of the date of thisrecording, July 18th 2024, we've
already seen an assassinationattempt on former President
Trump and a crescendo of voiceson the left calling for Biden to
(04:52):
step aside.
Not to mention Biden justcanceled several events as he
isolates with COVID.
Despite this, the markets havebeen surprisingly complacent as
investors come to terms with alikely Trump victory.
Personally, I'm not buying it.
I find it hard to believe theDemocrat Party will nominate the
oldest and one of the leastpopular presidential candidates
(05:15):
of all time.
I suspect political operativeshave been working on an ideal
replacement for months.
Though we all may disagreeabout politics, I think we can
all agree that this season ofthe Presidential Reality Show
has been one of the mostgloriously entertaining train
wrecks in recent memory.
Switching gears.
(05:35):
Let's now discuss the latestdevelopments in
corporate-sponsored retirementplans.
According to a recent articlefrom Plansponsorcom, plan
sponsors are increasinglylooking to adopt several key
provisions of the SECURE 2.0 Actto enhance their retirement
offerings.
Here are the top fiveprovisions, ranked from highest
(05:58):
to lowest, based on expected use.
The top provision, with thehighest expected adoption rate
of about 60%, is the IncreasedSpecial Catch-Up Contribution
Limit for participants aged 60through 63.
This provision allows olderemployees to contribute
additional amounts beyond thestandard contribution limits to
(06:19):
their retirement accounts.
It recognizes that individualsnearing retirement may need to
accelerate their savings effortsto ensure a more secure
financial future.
Coming in second, with about 55%of plan sponsors likely to
adopt, is the self-certificationof hardships and unforeseeable
(06:39):
emergency distributions.
This provision simplifies theprocess for employees to access
their retirement funds in timesof financial need.
Instead of going through alengthy and often cumbersome
verification process, employeescan self-certify their
eligibility for a hardshipwithdrawal.
Third on the list, with nearly50% expected adoption is the
(07:04):
provision allowing withdrawalsfor federally declared disasters
.
This enables employees toaccess their retirement savings
during times of naturaldisasters or other federally
recognized emergencies,providing much-needed financial
relief.
The fourth most likelyprovision to be adopted at
around 45% is eligibledistributions for domestic abuse
(07:27):
victims.
This important provision allowsindividuals facing domestic
abuse to withdraw from theirretirement accounts to cover
expenses related to escapingtheir situation, such as
relocation costs, legal fees andmedical expenses.
Finally, the fifth provisionwith an expected adoption rate
(07:49):
of about 40% is withdrawals foremergency expenses.
This allows employees to tapinto their retirement funds for
unforeseen financial emergencies, such as car repairs,
unexpected medical bills orurgent home repairs or urgent
home repairs.
By permitting these withdrawals, employers help their employees
(08:15):
manage sudden financial burdenswithout resorting to
high-interest loans or creditcard debt.
In essence, it turns theretirement plan into a piggy
bank.
As you can guess, I'm not a hugefan of this provision.
That wraps up our mid-year 2024update.
I hope you found these insightsvaluable.
Remember, staying informed andproactive about your finances is
(08:39):
key to achieving your long-termgoals.
For more detailed analysis andpersonalized advice, feel free
to reach out to us atwealthqbcom or email us at info
at wealthqbcom.
Thanks for tuning in and we'llsee you in the next episode of
the Gordon Asset ManagementPodcast.
Stay smart and stay invested.
Speaker 2 (09:03):
Gordon Asset Management LLC is a registered
investment advisor.
Opinions expressed in this showare those of the speaker and do
not necessarily reflect theopinions of Gordon Asset
Management LLC.
All statements and opinionsexpressed are based upon
information considered reliable,although it should not be
relied upon as such.
Any statements or opinions aresubject to change without notice
(09:25):
.
Information presented is foreducational purposes only and
does not intend to make an offeror solicitation for the sale or
purchase of any specificsecurities, investments or
investment strategies.
Investments involve risk and,unless otherwise stated, are not
guaranteed.
Past performance is notindicative of future performance
(09:46):
.
Information Express does nottake into account your specific
situation or objectives and isnot intended as recommendations
appropriate for any individual.
Listeners are encouraged toseek advice from a qualified tax
, legal or investment advisor todetermine whether any
information presented may besuitable for their specific
situation.
(10:06):
You
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