What’s the Move? By J.P. Morgan | Ep. 4: Let’s Get the New Year Started


[intense electronic music] Happy New Year, and welcome back to What’s the Move?
by J.P. Morgan. And I’m your host, Ted Dimig. So it’s 2020, time to set
those New Year’s resolutions and quit all your bad habits. You may also be thinking, what
can I do differently this year to start the year off
financially strong? So, I’m going to ask you
to put on those glittery outfits and
those ugly party hats, and let’s go find out
what our guests think. Smile Clay.
[chuckling] Look into the camera? – What was my line?
– I used her line. And I’m, uh sorry. All right. Here we go.
– I’m ready. You don’t have to look at me,
you’re looking at the camera. I’m Clay, and in January, I’m focused on dividend paying
equities. I’m Eric, and in January, I’m
focused on having a plan. My name is Jeanne, and I think
January is when you should put your
money where your mouth is. ♪ Thank you for joining us
for the first episode of “What’s the Move?” in 2020,
or almost 2020. It’s New Year’s Eve. And, you know, I got myself
thinking I’ve got three good friends and
colleagues from J.P. Morgan here and we’re not dressed up enough. I mean, when I think of New
Year’s, I think of bow ties, I think of sparkles. Can we fancy this up
a little bit? Look what we got.
Aww! Nice, Nice. This is… This is a bit lovely. Eric: Are we really going
to wear these? I don’t know about you guys,
but I’m feeling much better. So let’s jump into the regularly
scheduled program. OK Clay, first question’s
for you. 2019 was a great year
for equity investors. When you’re looking at 2020, what’s the first thing people
should be focused on? Yeah Ted, 2019 was a great year
for all investors. You had asset classes outside of
equities and around the world trading up, a lot of superlative
returns across the spectrum. But to your question, we’re
focused on three things in 2020: where to find growth in a world
that’s otherwise slowly growing, where to find yield when
interest rates around the world are depressed, and then third, because of the valuations and
level of markets today, looking for protection where
it makes sense in a portfolio, perhaps even buying insurance. Dividend paying stocks in
the U.S. could display all three
of these characteristics of growth, income,
and protection. Another clear trend in 2019, in addition to the superlative
returns, was lots of headlines. – Oh, yes.
– China, tariffs, uncertainty. How would dividends fare in
an environment like that? The important thing, Ted,
to do is to try your best to invest through it. Focus on the long term and less on the short-term
market changes. I’ve got one more question for you.
– Go. Historically, when you think
dividends, you think income. But, generally when people
are looking for income, don’t they go to bonds? Why are dividends attractive
now? Look, income traditionally
is going to be associated with fixed income or bonds. But what you’ve seen as interest
rates have continued to trade down over the course
of last year and the previous 10 years. And I would expect that
you’re going to see depressed interest rates
in 2020 as well. It’s interesting that right now
you can actually find stocks that pay dividends
that are greater than the yields on bonds, greater
than the yields on treasuries. This is very atypical and something I think you can
take advantage of in 2020. Eric, I’m going to go
to you next. You’ve got a different
perspective and yours is a bit more focused on what I’ll call “financial
wellness, financial health.” What’s the most important thing that people should be doing
in January of 2020? When you’re coming off
the new year, a lot of people think about
New Year’s resolutions. New Year’s resolution? Do you
have one? – Diet.
– Diet. – Exercise.
– All right. Diet and exercise are some
of the most popular. And what I tell all
of my friends, what I tell all my family,
is to really compartmentalize and breakdown all of your
New Year’s resolutions into three categories: physical
fitness, mental fitness, and financial fitness. And it’s all about having a plan
and understanding what are you trying to achieve, whether it’s 2020
or longer term. So, I get the concept of having
a plan when it comes to dieting; you know what, I’m going to eat
less carbs and more veggies. When I think about
it financially, can you expand upon it? What matters? I’ve got kids.
How old am I? All these types of things
rush into my head. It’s not too dissimilar. And the first thing I’ll say is most people have many
financial institutions. You may have a checking account
at one institution, a 401K at your employer, and maybe you have an investment
account at a third party. It’s really important to get
all that information together and understand what are you
trying to achieve? Now, a plan is very, very
simple, Ted. It could be short term
and tactical. So, I’ll give you some examples:
it could be your saving up short term to go on a weekend
vacation. Or maybe a little
longer term, long-term vacation. Maybe you want to take
the family on a long two-week trip
somewhere. But you could also think much more strategically
and long term. One of the most popular ones
is thinking about retirement. And a lot of the things
that Clay talked about are very, very important,
but they’re headline risk. And what we try and do is what
I try and tell people is: don’t let the headline risk
get in the way of a good financial plan. We are —my wife and I are—
actually having this conversation right now. I feel like January’s that time that we all reset, kind of,
our fiscal calendars. What do you think is some
best ways that I can have this
conversation with my family? How do we make this plan
for retirement? Well, you’re really– one of the
things you want to talk about for retirement specifically is that’s the time of year,
January, where you can enroll in all of
your companies benefit plans and you really want to make sure
that your contributions you’re applying to
your 401K plan; take advantage of the maximum
contribution your employer’s willing
to match. That’s one of the best things
you could do for long-term compound. And just building upon this,
because not everybody is even aware of what exactly
that means. There are a lot of firms that
will match you dollar for dollar for everything that you put
into a 401K. So, make sure you know
what benefits your employer offers to you. Okay. Jeanne, you’re up and your
idea kind of rhymes with Eric’s. So, from plan to action is the
way that I’m thinking about it. What do you think is the most
important things for people to be focused on in January
of 2020? Much like the resolutions,
right? Having a plan is a great
starting point, but you have to put that plan to
action like you were saying. So, I plan to go to the gym, but if I don’t actually go
to the gym, then that plan wasn’t doing anything for me. So, Eric already talked about setting those 401K
contributions. And when I think about what
happens in January or just in December, you might
receive money gifts, you might have bonuses that
your company gives you. There might be a little bit
of extra money also. And so get that money to work in something that helps you
achieve that goal. So, any immediate financial
goals that come to mind? Ted, let’s start with you. Education. I’ve got two kids,
I want to send them to college. -Education here, too.
-Excellent. – Retirement.
-Gotcha. So, one thing that you can do
with that extra money is start funding something
that we call a 529 plan. Not only is it a great way
to get money to work from an investments and building
over time through those investments,
but also you’re doing it in a really tax efficient way
so that compounding is actually faster than
it would be elsewhere. And then, of course, for you
Clay, thinking for your retirement,
doing the same thing, but doing it whether it’s in
an IRA, a 401K. But it’s really about getting
that money to work. And if you have specific goals,
you know, thinking about
compartmentalizing your cash and putting that to work
in those buckets. The other technique that I also
always remind folks of is April 15th, Tax Day,
when you get tax refunds. A really good technique would be
to take a portion of that refund and put it towards one of your
financial goals, whether it’s for retirement or whether
it’s for saving for college education. Eric, you have thousands
of financial advisors all across the United States that are having these
conversations with their clients and customers
today, I presume. How do you think they’re talking
about investing for children’s education or
investing for retirement in this environment? Well, listen, Clay,
it’s a good question. And we do get it all the time. And I think there’s two things
that we tell people: number one, a well-diversified
portfolio is critically important. But number two, and most
importantly, you mentioned, and actually all of you
mentioned, a lot of things
like headline risk. We’re heading into
a political election year. There’s trade wars or trade
tensions around the world. And we teach everyone to focus
on the long term. So, if you’re looking to save
for college education, which could be a 15-20
year plan, or you’re looking personally
to retire, that could be even
a longer plan. And we try to tell all of our financial advisers
and our clients not to focus on the short term
tactical what, which we refer to as noise, and really focus on
the long-term plan. I’m going to thank the three
of you for joining us on the January episode of
“What’s the Move?” Remember, these aren’t
recommendations. These are just three ideas from three of my colleagues
at J.P. Morgan. Thanks for joining me. This is…What time is it
right now? Do you guys know? Everyone: It’s almost midnight! Five, four, three, two, one. Happy New Year! [cheerful music] [soft blown horn] Everyone: ♪ For auld
acquaintance be forgot ♪ [mumbling] Jeanne: How am I the only one? ♪ Should auld acquaintance
be forgot ♪ ♪ and auld lang syne. ♪♪ – Pretty good I think.
– It’s a wrap.

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