2017 Stock Market Performance

Looking Back At The 2017 Stock Market

The stock market had one of its best years in recent memory, as noted below is all of our numbers and indices. The thriving stock market is the result of increasing economic growth and enormous corporate profits. The biggest catalyst was likely the sweeping tax cuts President Donald Trump just signed into law, which over time will save corporate America billions on what they owe Uncle Sam. This sweeping tax cut was the topic of discussion all year, but didn’t get signed into action until December of 2017. Investor.com put together a great chart of all events throughout 2017.

Suggested reading: 2018 Stock Market Forecast – Can the stock market bull keep raging in 2018?

Noteworthy stock market news from 2017

  • At nearly nine years old, the bull market is now the second-oldest and second-strongest in history.
  • The Dow raced 25% higher in 2017, getting even closer to 25,000 and making this year its best since 2013.
  • It had taken the Dow 14 years to climb from 10,000 to 15,000, but just three and a half years to reach 20,000 in 2017.
  • The broader S&P 500 zoomed 19%. And the Nasdaq jumped an impressive 28%.
  • Indexes made superb gains in a year of unusually low volatility.
  • The Nasdaq’s worst drop was only 4.4%.
  • Just 18.7% of taxpayers own stocks directly. Roughly half of Americans participate in the market through an employee-sponsored retirement plan, according to a Pew analysis of Census Bureau data. That gap has contributed to record-high wealth inequality in America.

2017 Year-End Stock and Bond Index Performance

  • NASDAQ 28.2%
  • Dow Jones Industrial Average 25.1%
  • S&P 500 Index 19.4%
  • Foreign Stocks 27.4%
  • U.S. Bond Index 3.55%

How Did My 401k Do in 2017?

Last year in 2017 my retirement accounts (one 401k and two Roth IRA’s) were collectively up 17.5%. I am not thrilled about under-performing the major market indices, considering the S&P 500 was up 19.4% and foreign stocks were up over 27%. However, I am very pleased with my performance.

The Vanguard Target Retirement 2040 Fund (VFORX) was up 20.7% in 2017. This is my personal benchmark because I could invest all my retirement portfolio into one account or choose a number of index funds to diversify. I am doing the latter and in 2017 I lost to the 2040 Target Date Fund by 3.2%.

However, over the last 10 years, which is essentially my working career, my personal retirement performance return is 11.1%. I am thrilled with that return. If I can keep that double digit return up until retirement I will be extremely wealthy. But I have worked during the best bull market in history (2007 to 2017) so to keep those returns is unrealistic. But again, I am very happy with my 10-year return of 11.1%. As stated earlier my personal benchmark that I compare my retirement portfolio to is the Vanguard Target Retirement 2040 Fund (VFORX), which is only up 6.44% in the last 10 years.




Millennial Personal Finance Blog

My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.

Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.




2018’s 10 Best Mutual Funds for Millennials

Looking for the best mutual funds of 2018 for Millennials? Look no further my Millennial friends, here is my list of the 10 best mutual funds for Millennials. I can’t guarantee that you will become a millionaire via these 10 best mutual funds, but I do know that with consistent investments via dollar-cost-averaging, while holding forever, will certainly get you one-step closer to one day becoming a Millennial Millionaire. Simply stay the course and keep on investing, regardless of market conditions. This is your surest path to wealth and financial independence.

2018’s 10 Best Mutual Funds for Millennials

  1. Target Date Funds (2050, 2055, 2060)
  2. Small-Cap Value Index Fund (VSIAX)
  3. Total Stock Market Index Fund (VTSAX)
  4. 500 Index Fund (VFIAX)
  5. LifeStrategy Growth (VASGX)
  6. Total International Stock Index Fund (VTIAX)
  7. Emerging Markets Stock Index Fund (VEMAX)
  8. REIT Index Fund (VVIAX)
  9. Balanced Index Fund (VSMAX)
  10. Intermediate-Term Bond Index Fund (VBILX)




My aforementioned list of the top 10 mutual funds for a Millennial is made up of all Vanguard funds. I absolutely love Vanguard and their funds, which are the lowest cost funds out there. Keeping your fund expenses low is extremely importing, and that’s what Vanguard has set up to do.

Target Date Funds

Number one on my list of the 10 best mutual funds for 2018 are target date funds. The three biggest players in the “target date funds” space are Vanguard, Fidelity Investments, and T. Rowe Price. They are virtually all identical, except that Vanguard is about 50 basis points cheaper, e.g. about 0.50% less to manager and that is why Vanguard target retirement funds win-out in my book.

Millennial Millionaire

Millennials, you have to start investing now. The best time to plant a tree was 20 years ago…the next best time is today. Same goes for investing. Millennials should begin investing right now and make saving regularly a habit, and prioritize paying yourself first above all other financial obligations.


Best Smart Beta ETFs for 2018

What are Smart Beta ETFs?

For those who are new to Smart Beta ETFs, essentially Smart Beta ETFs are really anything that isn’t solely market-cap weighted. Instead, Smart Beta EFTs are weighted by Value, Growth, Dividend, Volatility, Size, etc. Smart Beta ETFs are also another way to package active management by putting it into a rules-based engine, while striping out the capital gains and high fees.

Best Smart Beta ETFs for 2018

We are in a historically low period for volatility, which hurts active management and Smart Beta. I think 2018 is the year for Smart Beta EFTs to come into their own and make a bigger splash. Below is my list of the 10 best Smart Beta ETFs for 2018. All of these ETFs have an expense ration under 0.50%.

  1. Vanguard Small-Cap Value ETF (VBR)
  2. BlackRock iShares Edge MSCI Min Vol USA ETF (USMV)
  3. BlackRock iShares Russell 2000 Value ETF (IWN)
  4. Vanguard High Dividend Yield ETF (VYM)
  5. Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG)
  6. SPDR Portfolio S&P 500 Growth ETF (SPYG)
  7. Schwab Fundamental Emerging Markets Large Co. Index ETF (FNDE)
  8. SPDR NYSE Technology ETF (XNTK)
  9. BlackRock iShares S&P Small-Cap 600 Value ETF (IJS)
  10. SPDR S&P Emerging Markets Dividend ETF (EDIV)




Cost of Raising a Child in 2017: 9-Month Old

How Much Does it Cost to Have a Baby?

My wife and I are first-time parents and we are now 9-months into the “parenting” process. I made it a goal to track all of our childcare expenses so I could truly report on the cost of raising a child. I invite all of my personal finance readers to follow along our journey as I diligently track all expenses involved in truly raising a child these days in middle class America.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child

The consensus from my research was it costs $14,000/annually to raise a child in 2017. Well, we are three quarters of the way through year one and we have spent just over $5,000 on our baby girl thus far. It is very early and she is still very young, but we are on pace to spend less than half of that $14k per year average. However, its obvious that what we spend in year one will (and should be) far less than what we’ll probably spend in, say, year 5 and/or 14 and beyond when expenses really increase to raise a child. But I like the pace we are on and currently setting.




How Much Does It Cost to Raise a Child?

We are 9-months in and thus far we have spent $5,220 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts and gift cards from our baby shower that are still holding us over. We are nearing the end of our baby shower gift cards, but I estimate that we have about $100 left to various stores.

Child Care/Nanny

We use a part-time nanny to watch our daughter two days a week. We consider ourselves very lucky though, as we have a nanny who comes to our house twice a week, a nanny our daughter loves, who really doesn’t costs us that much.

My wife is off two days during the week and then a family member watches her another day, so we only need to “pay” for two days of child care. Thus far we have spent a grand total of $4,160 on childcare/daycare.

Cost to Raise a Child in 2017: 9-Month Old

  • 1st month = $414
  • 2nd month = $105
  • 3rd month = $545
  • 4th month = $643
  • 5th month = $520
  • 6th month = $866
  • 7th month = $650
  • 8th month = $707
  • 9th month = $770
  • Since inception (March, 2017) = $5,220




GOP Tax Bill

GOP Touts “Progressive” Tax Plans

First off, before I get into my observations of the Republicans GOP Tax Bill, I just want to state that I am moderate and fairly apolitical. I tend to see pros and cons on both sides of the isles, whereas hardcore republicans and democrats appear to have never had a bad idea, ever. That goes for both parties. And both parties also think the other side is out of their mind on every single thing they support (that the other party opposes). Unfortunately politics has become very black and white, either or, and there isn’t much room for grey any more, which is a shame.

Anyways, back to the recently announced GOP Tax Bill and what has been said this past month about it. Below is a screenshot I took while watching one particular show. This was a more conservative show and their fear was that all the wealthy individuals from high taxed states like New York, New Jersey and California will leave for lesser taxes states like Florida and Texas. That doesn’t make a whole lot of sense to me considering individuals in those states are already taxes high…but NOW they will leave?

GOP Tax Bill
GOP Tax Bill




Conservative speaker of the house Paul Ryan says the average family will save $1,182 with this in GOP Tax Bill. But, based off the below, that doesn’t seem likely. Which is right?

Democrats on the GOP Tax Bill

Then, on the other side of the aisle I watched a much more liberal newscast and they, of course, were stating just how bad this GOP Tax Plan is for the middle class and lower income families. This show citied a study from an independent economist who was projecting out to 2027 and what the proposed tax plan would mean for them.

    • In 2027, families making $40,000 to $200,000 would see an after-tax increase of 1% to their incomes.
    • In 2027, however, those families making $500,000 to $1,000,000 would be the clear winners and see an after-tax increase (on average) of 2.5% to their incomes.

So, overall, this liberal show states that the proposed GOP Tax Bill is purely a tax plan for millionaires.

To be honest, I’m not sure who is right. It goes to my earlier point that neither side can see good in the others points. Never will, it seems like.




2018 401k Contribution Limits

401k Contribution Limits in 2018

On October 19, 2017 the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2018. This news means the contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan (TSP) is increased from $18,000 to $18,500. However, the catch-up contribution limit for those age 50 and over remains at $6,000. So if you are 50 or over, you may contribute up to $24,500 towards your 401(k) in 2018.

Roth IRA and Traditional IRA Contribution Limits in 2018

In 2018 both the Traditional IRA and Roth IRA contribution limits will remain flat at only $5,500 for those younger than age 50, and $6,500 for those who are 50 or older. That’s the same limit that’s been in place since 2013. From 2008 to 2012 the IRA contribution limit was $5,000.

2018 Traditional IRA and Roth IRA Eligibility

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the saver’s credit all increased for 2018.

2018 Traditional IRA Eligibility

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or their spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor their spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.)

  • For single taxpayers covered by a workplace retirement plan, the phase-out range is $63,000 to $73,000, up from $62,000 to $72,000.
  • For married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $101,000 to $121,000, up from $99,000 to $119,000.
  • For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $189,000 and $199,000, up from $186,000 and $196,000.
  • For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

2018 Roth IRA Eligibility

The income phase-out range for taxpayers making contributions to a Roth IRA in 2018 is $120,000 to $135,000 for singles and heads of household, up from $118,000 to $133,000 in 2017. For married couples filing jointly, the income phase-out range is $189,000 to $199,000, up from $186,000 to $196,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.




The 10 Commandments for Individual Investors

Book Review: Winning the Loser’s Game: Timeless Strategies for Successful Investing by Charles D. Ellis

I recently completed one of the greatest books on investing, written by one of the most influential investors of all time. That book is Winning the Loser’s Game: Timeless Strategies for Successful Investing by Charles D. Ellis.

If you do a search for the best books on investing, Ellis’ Winning the Loser’s Game is always in the top 5. It’s a great, timeless classic on personal investing that is simple and concise. Ellis tells great, and often very funny, stories to convey his points, as well as compelling data to support his claims.

Charley Ellis lays out the most important investment lessons for individual investors. Those looking to save, invest and retire wealthy through diligent saving and investing in low cost index funds must read this book. He lays out the easy and successful ways to get rich (slowly) through proper investing. It is required reading for all my Millennial personal finance readers. Regardless of your investment knowledge, the sound money management skills laid out in this book are a must read for all audiences.

10 Commandments for Investors

One of my favorite parts of Winning the Loser’s Game: Timeless Strategies for Successful Investing by Charles D. Ellis is his 10 commandments for individual investors. Below are the 10 commandments for investors, which is a great guide for Millennial investors.

1) Save, save, save. Invest and save for your future happiness and financial security, as well as an education for your kids. This is the foundation of financial freedom and one day becoming financially independent to do whatever you want, whenever you want.

2) Stop speculating. The more you read up on investing the more you hear every reputable financial advisor insisting you only invest in low-cost index funds. Well some people just have to “play the market” to satisfy and emotional itch. If you do, try to limit yourself to 5% or less of your portfolio and be sure to track your performance carefully. You may stop “playing the market” faster than you think.

3) Don’t invest for tax purposes. Don’t believe in tax shelters or tax-loss harvesting. Don’t do anything in investing primarily for tax reasons. You absolutely should invest in a Roth IRA (or Traditional, but I strongly prefer Roth) and maximize contributions to your tax-sheltered 401(k) every single year. But, outside of these accounts, don’t overthink it.




4) Don’t view your home as an investment. A home is not a good financial investment and never was. But a home can certainly be a fine investment in your family’s future and happiness. Your goal should be buy a modest home that you can afford and that your family will love. Then, pay the mortgage off and live there forever. That’s when your house becomes a good investment.

5) Just say “no” to commodities. Dealing with commodities (oil, gold, silver, corn, livestock, etc.) is really only price conjecture. It is not investing because there is no economic efficiency.

6) Be very leery of stockbrokers and mutual fund salespeople. Their job is not to make you money, but to make money off you. Now not all stockbrokers and mutual fund salespeople are bad, but you must be very careful and watchful when dealing with one.

7) Don’t invest in new or “interesting” investments. Stick to the basics, total stock indices, REITs, emerging markets, etc.

8) Don’t invest in bonds just because you heard they are conservative and safe. Bond prices fluctuate nearly as much as stock prices do. And bonds are terrible against one major risk – inflation.

9) Come up with goals and write them down. And then stick to them. Write down your long-term investing goals (retirement and college), home payoff, retirement income and net worth goals. It’s best to review these goals annually to ensure you are on track.

10) Don’t trust your feelings. When you feel overjoyed, you’re probably in for a bruising. When you feel disenchanted, remember that it’s darkest just before dawn, so don’t take any action. Less is better when it comes to investment activity. Set it and forget, and keep investing.




How Much Does it Cost to Have a Baby?

Are you and your spouse considering starting a family? If you’re like me then you are doing your due diligence prior to beginning this magical, lifelong journey that is parenthood.

I did a lot of research prior to us having our first baby and it was really hard to find any great info. My health insurance gave me an “estimate” based off my standard PPO or high deductible plan. My estimate was $3,000 for everything. But, it was a bit off…and we didn’t have any complications whatsoever.

Hospital and Delivery Cost to Have a Baby

I have made it a point to track all of our child care expenses for my Millennial personal finance readers. And now I finally have all of our medical bills back for the birth of my baby girl, so I can now post exactly how much it cost us to have her (delivery, hospital stay, anesthesia, and baby).

Item

Total

Insurance

Net Total

Delivery $1,654.00 $581.88 $1,072.12
Lab Work $96.00 $91.97 $4.03
Hospital Stay $17,213.80 $14,561.79 $2,652.01
Anesthesia $6,176.00 $5,906.12 $269.88
Baby $4,288.56 $3,750.16 $538.40
Baby’s 1st Dr Check $300.00 $268.04 $31.96
$4,568.40