Stay ahead of the markets with timely insights by uncovering the latest on the global economy, geopolitics and retirement, among other timely investment ideas - Student of the Market - February 2024
Receiving an unexpected sum of money can be a welcome surprise, but deciding what to do with it can be a challenge. Should you save the money or pay down debt? Invest the funds or donate to charity?
While rushing to book a vacation with proceeds from a windfall may be tempting, it might be more rewarding to use the funds to shore up your finances for the long run. Here are five strategies to consider:
Spring is a time of renewal and rejuvenation, as the world awakens from its winter slumber and new life begins to bloom. As the saying goes, "April showers bring May flowers", and this sentiment can also apply to your financial life.
Just as the rain nourishes the soil and helps plants grow, taking the time to "spring-clean" your financial plan can help you grow and thrive in the months and years ahead.
Retirement planning often focuses on the accumulation phase: saving diligently and investing wisely. We spend 40 or more years of our lives focused on building the proverbial “nest egg,” but after retirement things change and so should our financial focus.
There are a variety of questions that must be answered. How much should you be withdrawing annually? Should you go with your IRA first or your brokerage account? Should you withdraw a fixed percentage or fixed amount? How much will you leave behind?
Having a well planned withdrawal strategy is important:
When can you access your savings without a penalty? When should you enroll in Medicare? At what age is it best to collect Social Security?
In the years leading up to retirement, there are a number of key milestones and deadlines to consider. Without careful attention, it's easy to miss these checkpoints and the consequences can be severe. Let's delve into eight crucial moments to help you stay on track.
In the years leading up to retirement, there are a number of key milestones and deadlines to consider. Without careful attention, it's easy to miss these checkpoints and the consequences can be severe. Let's delve into eight crucial moments to help you stay on track.
Mortgage rates have been rising steeply since 2021 and are now commonly found in the neighborhood of 7%. This is significant as you might remember rates in 2021 were often below 3%. The run-up has cooled the housing market considerably. Now, lenders are having to get creative to drive new business. They’re offering more incentives to find new buyers and to undercut the competition. Let’s take a look at some of these strategies (gimmicks if you’re a pessimist), to help you and those you know make smart lending decisions.
Making financial decisions can often be more challenging than it appears. A variety of subtle influences can cloud our judgment. Among these, behavioral biases like anchoring, loss aversion, and herd behavior have been found to shape our choices significantly. In this article, we’ll explore each of these biases and ways to counteract their influence.
If We Set Unrealistic Expectations for Ourselves, We Never Reach True Wealth.
What does it mean to be rich? Some people live by the balance sheet, some die by it. Others don’t even know what a balance sheet is. How do you define wealth for yourself? A recent article on CNN reported that “a whopping 70% of those with at least $1 million in assets that are invested or available to invest, excluding home values, don’t consider themselves to be wealthy – only when they hit the $5 million mark (did) millionaires begin to feel wealthy.”
Our feelings about wealth stem more from our life decisions and social circles than from the numbers we see on our statements.
Teddy Roosevelt once said, “Comparison is the thief of joy.” Feeling wealthy means feeling you have enough, of wanting what you have rather than being consumed with what you want.
Is Money a Supporting or Driving Element?
It's common for people who are retiring to set their retirement date in either the springtime or the early summer. If you happen to be one of those lucky folks who are going to retire next year, then "Congratulations!"
But before you start planning your retirement party, make sure you do these four things if you're retiring next year.
Investing during market volatility can be like driving through a winter storm. Your best plan of action is to focus on what you can control and keep progressing towards your destination.
As the markets have continued to adjust to rising interest rates and inflation, you might think of your financial plan as a GPS system that you can rely on to keep you on track even when it's tough to see the path forward.
Here are five aspects of your financial plan that we recommend focusing on as we wait for this storm to pass … and prepare to weather the next one.
As summer heats up, it pays to take a good look at how flexible you are. When you plan for the future, you need to be adaptable. No one knows what tomorrow holds.
This is certainly true in the world of work. In just over a month from now we will celebrate Labor Day. In 1894 President Grover Cleveland signed Labor Day into law as a federal holiday to placate unions, following a bloody and tumultuous strike at the Pullman Co., which made railcars. Today, the break on the first Monday of September is less about labor and more about recreation, cookouts, and the mental end of summer.
To some, labor merely is about a job or the lack thereof. For others, the concept of labor transcends a job. It’s about a career, economic stability for self and family, satisfaction, fulfillment, success, and a sense of mission – a calling. Consider a young person attempting to think about a future of work that may span 50 to 60 years or more. How does one grasp a fast-changing world to formulate a job or career strategy, and an investment strategy to accumulate capital needed to fund their secure future?
Have you ever participated in one of those “future think” company planning sessions? You know, the one that asks where you want the company to be 5, 10, and 15 years from now?
A senior executive of a firm recalled the effort to formulate a five-year plan when he was in top management at a Fortune 500 company. When the plan was completed, the chief executive officer told her team, “If we execute this plan exactly as we have laid it out, in five years we will be out of business.”
Having deflated the egos of those who labored to produce a creative plan, she explained that the world and marketplace in five years would be totally different. If they did not change the plan as they went along, they would be left behind, becoming obsolete and less profitable.
We see examples in the stories of:
Microsoft, one of the glowing success stories of the last century, now competing with Apple and Google. Personal computer sales, the historical mainstay of Microsoft, have been eroding for years as users switch to smartphones and tablets. But Microsoft has adapted.
Canada’s Research in Motion was a global leader in wireless innovation, having revolutionized the mobile phone industry with the introduction of the BlackBerry in 1999. The company found itself on the ropes as the iPhone became the “must have.” Blackberry users went dark on January 2, 2022.
Sears for years was an appliance sales leader with its Kenmore brand. For a myriad of reasons, Home Depot, Lowe’s and a host of other competitors cut into Sears’ profits. In 2018, Sears filed for Chapter 11 bankruptcy protection and as recently as May 2022, announced the closing of about 100 stores. This store-closing-wave leaves about 750 Sears stores remaining – down from approximately 3,500 at its peak.
The message? Flexibility counts. Anticipating change counts, with Plan B or even C at the ready. A plan, whether a career plan, a financial plan, or a life transitions plan is a road map. Every road is subject to disruption, detours, potential dead ends and rabbit trails.
Yes, you want a concept of where you will be in one, five, ten years and beyond. But any plan must be dynamic, fluid, and adaptable. You cannot set it and forget it.
Every money manager has a turnover ratio, the average percentange of stocks sold every year. Stock buys may disappoint and underperform. Other stocks may reach a targeted sell point and be sold in favor of a better bargain.
Asset classes may underperform or outperform in the short run and then change direction. Assumptions may appear wrong near term, and turn out to be sound in the long run. Diversification is important, as crystal balls are fallible.
Everyone, whether a breadwinner, a stay-at-home parent, a retiree or an investor, should have a contingency plan to deal with personal setbacks, career reverses and market disruptions because stuff happens. Change is the only constant. Well, death and taxes are also. Have you reviewed your “what if?” plans lately?
Labor Day will signal that the fourth quarter is less than a month away. Have you reviewed next year’s tax strategy? Christmas and holiday promotions will be here before we know it. Have you started planning for next year?
Make your summer …and life plan flexible.
