Dear Friends:

A Great Q2: The Ship Comes in for Diversified Portfolios

Q2 was a great quarter in the US equity markets as capital investment in AI infrastructure expands rapidly and at least initially is expected to broadly benefit many areas of the economy including the AI companies as well as chip-makers and infrastructure companies.  Major US Index funds are increasingly highly concentrated in a handful of stocks, with the top 5-7 holdings making up 40% or more of some of these funds, particularly those from Fidelity, Vanguard, and Blackrock.  Fortunately, we are now seeing the other parts of the market, including US Small Cap stocks lead the way year to date.  If you just hold an index fund which is common in most corporate 401Ks, you may want to check as those are less diversified in terms of exposure to these other sectors of the market.

Through Q2, the US stock market is up ~10% year to date, with small cap stocks up 22%, and international stocks up ~12% on average.  Our portfolios at E|Financial Alliance have maintained an allocation to small, mid-size, and international stocks depending on client goals, which have benefited nicely from their exposure beyond large cap growth stocks. Diversified portfolios are designed to thrive over the long term, by reducing risk, balancing investment exposures, and allowing for continuous reinvestment of dividends and capital gains. Additionally, in recent years we’ve seen the benefits of using certain diversifying investment options like structured notes, floating-rate funds, and short-duration high-yield funds, enhancing our portfolios, providing resiliency and increasing the likelihood of success over time with less volatility.

 Trump Accounts – What to Know Now

From our analysis, anyone can contribute to a child’s Trump account. If you have a child in your life who is under 18, their parent or guardian can open a Trump account. (Go to trumpaccounts.gov to open it.) After they turn 18 they no longer qualify for one. The annual maximum contribution is $5,000.

If there is or might be a baby in your life born between 2025 – 2028, know that opening a Trump account gets them $1,000 of seed money from the government, plus another possible $250 one-time payment from the Dell Foundation, depending upon their zip code. Both payments count toward the annual $5,000 limit.

Opening an account involves filing form 4547 and downloading the Trump accounts app.  You need to complete form first before the app.  The process can be a bit clunky but if you have a child born in the 2025-2028 window to get government funding it could be worth it.  For older kids the UTMAs and Roth IRAs may be better options as they offer more flexibility and allow withdrawals before 18 (although potentially with penalties) while the Trump accounts are locked up with no withdrawals for any reason until age 18 after which taxes and penalties apply.  If you are unsure what is right for you, please reach out to discuss.

 As always, please let us know if we can assist you in any way.  It is a joy to partner with and serve you on your financial journey!

Regards,

Mitch Anderson                                              Destin Tompkins