Financial Insights

Last week marked the beginning of the final quarter for 2022, and while it saw its fair share of volatility throughout the week, stocks ended the week positive. The S&P 500 ended the week up 1.56%. The strongest performing sector among U.S. large caps was energy, which off the heels of a rally in oil prices ended the week 13.86% higher. While of lesser magnitude, additional leadership came from the industrials (2.87%), materials (2.15%), financial services (1.94%), communication services (1.70%), and technology (1.67%) sectors. Healthcare (1.33%) lagged the S&P 500 but still finished positive, while consumer staples (-0.36%), consumer discretionary (-2.63%), utilities (-2.63%), and real estate (-4.06%) all finished lower for the week. U.S. small cap stocks outgained their large cap counterparts, with the Russell 2000 index returning 2.27% to start the fourth quarter. Foreign stocks also outpaced large cap stocks in the U.S., as international developed stocks (MSCI ACWI ex US index) and emerging market stocks (MSCI Emerging Markets index) gained 2.05% and 2.52% respectively.   Treasury yields made significant moves throughout the week but ultimately ended the week just slightly higher, helping to drive the Barclays Aggregate Bond index lower for the week at -0.25%.

When an ExxonMobil employee needs funds for an unexpected financial event like medical bills or a home repair, they may explore options like a line of credit or loan to access liquidity. Too frequently, employees fail to consider one of the most advantageous sources of liquidity - a loan from your assets held within your company 401(k).

Companies give out many forms of equity compensation. A common form of equity compensation is Restricted Stock. There are two main types of Restricted Stock, Restricted Stock Awards (RSA) and Restricted Stock Units (RSU). We have already discussed RSUs and how they work in another article (please click here to see it). This article will discuss RSAs and the beneficial 83(b) election that can be made on them.

It was a poor week for the stock market, as segments across the board experienced pullbacks. The S&P 500 retreated -4.73% for the week, with the biggest detractors coming from the materials (-6.64%), communications services (-6.42%), industrials (-6.37%), real estate (-6.23%), and technology (-6.11%) sectors. Consumer staples (-3.48%), financials (-3.77%), and utilities (-3.78%) held up better than the S&P 500 as a whole, but still sustained losses. The best sectors for the week were the healthcare (-2.32%) and energy spaces (-2.59%), but these rounded out a week that saw every sector of the large cap stock benchmark fall. U.S. small cap stocks outperformed their large cap peers by a small margin, ending the week down -4.46%. Stock markets overseas showed better results but still saw weekly losses. International developed stocks (MSCI ACWI ex US index) ended the week down -2.76% while emerging market stocks (MSCI Emerging Markets index) outperformed developed markets with a loss of -2.61% for the week. A likely partial catalyst for these losses was a continued rise in bond yields, with the 10-year treasury yield closing at just under 3.45%. The rise in yields coincided with the Barclays U.S. Aggregate Bond Index declining -0.93%.

You might have been told at some point in your life that there is a simple calculation you may use to determine how you should allocate your assets between equity and fixed income assets. This formula is rudimentary and does not consider your personal retirement goals or risk appetite. This equation has misled investors for years and can cause you not to have sufficient assets to meet your goals or leave you awake at night, fearing that your accounts are too volatile or risky.

As we reach the end of the year, a tax topic that will be discussed more will be the IRS 401(k) contribution limits. This contribution limit has a significant impact on your retirement savings and the strategies that are available to you. The 401(k) contribution limits for 2022 are as follows:

A beneficial tax planning strategy is available for high-income earners Level 67 or higher at Microsoft through Microsoft’s Deferred Compensation Plan (DCP). This plan allows high-income earners to shift income earned in years where they might be in higher tax brackets to years when they will hopefully be in lower tax brackets. The DCP can be very complex, and it is advised that you talk to a financial planner to discuss all of the benefits and options available to you.