2019

One of the best things about being a young adult is that you are starting fresh with countless opportunities and choices ahead of you. The downside can be that mistakes made early in life can have long lasting and sometimes expensive repercussions in terms of debt and credit. Establishing a budget is a great way to help ensure a good beginning to your financial lives. A budget is an itemized summary of expected income and expenses for typically a month’s time. It will show you how much money you expect to bring in against all your expenditures. The first step…

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: Markets maintained risk-on momentum in July, even as the Federal Reserve’s rate cut left investors questioning the degree of certainty around future policy easing. Economic data releases, consumer confidence, and better-than-feared quarterly earnings reports portrayed a relatively stable environment in the US. Manufacturing data in the Eurozone warranted attention, even as the European Central Bank indicated intent to employ monetary policy tools in September to address the economic slowdown….

Background When Congress passed Section 401(k) of the Revenue Act of 1978 they began a revolutionary risk-transfer as it relates to retirement savings. With employers increasingly embracing the cash flow predictability of defined contribution plans, the percentage of private-sector employees covered by a defined benefit plan has declined from nearly 40% in the late 1970’s to less than 15% today. Being only one generation into the evolved reality of “saving for yourself,” the consumer-driven nature of the US economy could be increasingly challenged as longevity collides with an under-saved population. Working to improve financial literacy may spur better financial well-being,…

Policy Pivot Underway: Heralded as the most important meeting of the year, the FOMC was fully expected to cut the Fed Funds rate for the first time since October 2008. In direct opposition to the negative outcomes triggered by hawkish concern this past December, the ~10% rally we’ve seen in the S&P 500 since the early-June lows has been driven almost entirely by a dovish shift in global monetary policy messaging. Although the futures market had signaled a ~20% chance of rates being reduced by 50 bps, the more tempered 25 bps “insurance cut” that was delivered was clearly the…

As of June 30, 2019, the official U.S. unemployment rate resides at 3.7% which is very near the lowest in 50 years, as 21.5 million new jobs have been added in the last decade. This rate is well below the Federal Reserve’s longer run projected rate of 4.2% which has been repeatedly revised downward over the last four years from approximately 5.2%. This longer run rate is supposed to represent “full employment” in the economy. Yet there continue to be discouraged workers and businesses struggling to fill open positions. The hallmarks of full employment are typically inflation and wage growth,…

This is our next blog in a series about setting up the next generation for success. In this piece, we outline the benefits of a 529 Plan A 529 plan is a tax-advantaged plan created to save money for college tuition, housing, books and other education-related expenses at most universities. In addition to traditional college tuition and fees, funds can be used at a number of vocational and trade schools. Also in some states, 529 savings now may be used towards tuition expenses at eligible private elementary and secondary schools (K-12). 529 plans must be established for one individual beneficiary….

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: Financial assets across the board performed well in June, capping a very strong first half of 2019. While global economic data releases tended to fall short of expectations, this only served to support the market’s firm conviction that the Federal Reserve will soon deliver insurance cut(s) to “sustain the expansion.” Not to be left out, the European Central Bank delivered a statement indicating that it would employ its monetary…

Policy Normalization on Target: With St. Louis Fed President James Bullard casting the first dissenting vote under Chairman Jerome Powell’s leadership, the FOMC voted to maintain the target range for the Fed Funds rate at 2.25% to 2.50%. As has been the case for recent meetings, this decision to take no action at this meeting was generally expected by the market with an ~80% implied probability. The quantitative tightening policy that’s allowed the Fed’s balance sheet to contract by up to $50 billion/month is now reduced to $35 billion/month. The program is set to end entirely in September. Growth: The…

Raising financially responsible children starts with having age-appropriate and open dialogues concerning money and family values at a young age. In addition to talking freely within the family, encouraging and demonstrating good money habits is critical. Children pattern their attitudes toward spending and saving after the grown-ups in their lives. To ensure financial responsibility when they are adults, let them catch you in the act of being responsible, early and often. Here are some suggestions for how you can teach and reinforce good financial habits. When discussing money, as much as possible, talk to them as if they are adults…

Please find the next blog in our monthly series that provides a review of the prior month’s market data, the state of the economy, and the global financial markets. Global Economy: To paraphrase, the month of May came “in like a lamb” but went “out like a lion.” It was a month offering little to calm investor nerves, given continued concern over tariffs and the relationship between the US and China, potential new tariffs with Mexico tied to immigration, conflict between the US and Iran, no resolution of Brexit amid the resignation of Prime Minister May, and economic news that…