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Posts by ashea

NEW OUTLOOK: WHAT TO DO IN A SLOW-GROWTH ECONOMY

Overview Technically, economists define a recession as a prolonged period of economic decline, often precipitated by two consecutive quarters of negative gross domestic product (GDP) growth. In the second quarter of 2019, the U.S. economy growth rate dropped to 2%,down from 3.1% in the first quarter. Preliminary estimates from the Commerce Department show that third-quarter GDP growth reduced further to 1.9%. Moving forward, analysts at the Federal Reserve Bank of San Francisco(FRBSF) forecast a growth rate between 1.5% and 1.75%, signaling furtherdeclining growth. For perspective, this projection is significantly lower than the most recent 10-year average of 2.4% and well below the 4% that was predicted would result from the Tax Cuts and Jobs Act of 2017. United States GDP…

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RECESSION OR NO RECESSION: IS THAT THE QUESTION?

Overview In November 2007, Ben Bernanke, the Federal Reserve Chairman at the time, publicly announced inflation was likely to start inching up and economic growth may weaken but remain positive. The consensus of the Federal Open Market Committee (FOMC) was that the U.S. economy was not headed for recession. One month later, the worst economic decline since the Great Depression commenced. To say it’s difficult to predict the timing of a recession is an understatement. A recession can be triggered by any number of different factors, even manmade ones. For example, President Richard Nixon is credited with causing the recession in 1973 by calling for a price and wage freeze two years earlier in order to stifle inflation. The events…

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DON’T LET NATURAL DISASTERS SINK YOUR SAVINGS

Overview As extreme weather events become more prevalent with each passing year, it’s worth examining the damage they can bring. In addition to the devastating effects storms have on an area’s people and property, they canalso take a toll on your investments. The National Oceanic and Atmospheric Administration said six major weather events have surpassed the $1 billion mark in losses so far this year, and that was before the most recent threat, Hurricane Dorian, hit the East Coast. The total from last year’s U.S. disasters exceeded $14 billion. While it’s easy to assume natural disasters have always been around, note in the accompanying bar chart that half of the top 10 most costly disasters in the past four decades…

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FINANCIAL LESSONS FROM THE ‘FIRE’ MOVEMENT

Overview The message in today’s news and financial media is loud and clear: We are living longer, so we must work longer to save more. However, not everyone is on board with that edict. Many millennials have grabbed hold of an idea detailed in a 1992 bestseller by Vicki Robin and Joe Dominguez, titled “Your Money or Your Life.” The basic premise is that by adopting a mindset of thriftiness and flexibility, people can avoid working during the healthiest years of their lives, achieve financial independence and retire early. It’s called the FIRE movement, an acronym that stands for “financial independence, retire early.” FIRE is a lifestyle system characterized by saving 50 percent or more of one’s income. This type…

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HOW TO MAKE CHARITABLE GIVING SUSTAINABLE

Overview Charitable giving is one of the oldest traditions practiced by mankind. The ancient Greeks believed philanthropy was fundamental to democracy. Hindu scriptures asserted it was an imperative duty, and charity is considered a sacred foundation for the religions of Christianity, Judaism and Islam. In more modern times, charitable giving has been incentivized by the tax deductibility of donations. However, the 2017 Tax Cuts and Jobs Act (TCJA), which went into effect Jan. 1, 2018, brought an increase in the standard deduction. That means fewer taxpayers are claiming itemized deductions — including charitable deductions. As of May 2018, 31 million taxpayers had deducted more than $147 billion in donations. By May 2019, only 11 million taxpayers had deducted just under…

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Weathering the Storm

Remember the adage, “March comes in like a lion and goes out like a lamb”? It certainly held true for the market this year; we gently entered the second quarter following the first quarter’s relatively mild volatility and strong performance. But in late April, the lion roared again — and volatility returned in full force. Mid-quarter, the Nasdaq and the S&P 500 closed down four weeks in a row, while the Dow saw six straight weeks of losses. The market’s sudden negative outlook seemed to be driven by the on-again, offagain news of the trade deal with China. More than once, hopes rose on reports we were on the brink of a deal, only to be dashed by another postponement.…

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RETIREMENT REFORM: WILL THE PROPOSED CHANGES AFFECT YOU?

Overview In May, the House of Representatives passed the Setting Every CommunityUp for Retirement Enhancement Act of 2019 (SECURE Act) with a remarkable bipartisan majority (417-3). One of the primary goals of the SECURE Act is to help current retirement plan owners maximize their savings efforts for long-term retirement income. Some of the features of the SECURE Act include: • Eliminating the maximum contribution age (currently 70 ½) for various retirement plans • Delaying the age when participants must begin taking required minimum distributions (RMDs) from tax-advantaged retirement accounts from70 ½ to 72 • Enabling more annuity options for retirement accounts • Requiring employer plans to provide participants an annual calculation of how much income their account’s lump-sum balance could…

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STUDENT LOAN DEBT NOW A FAMILY AFFAIR

Overview A college degree is widely considered the necessary foundation for an upwardly mobile career and ensuing lifestyle. But to pay the considerable tuition, dorm rental, meal plan and campus fees, students, parents, grandparents and even other relatives are applying for loans to help cover the full cost. Unfortunately, this has resulted in student loan debt becoming an increasingly onerous burden for people of all ages. Graduating with this type of financial burden can seriously impede a young adult’s ability to save and invest money, which leaves less time to take advantage of the power of compound interest. For middleaged parents and retirees, tapping into investments or having to pay off large loans can threaten long-term financial security. The financial…

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SANDWICH GENERATION: STUCK IN THE MIDDLE WITH YOU

Overview More than 40 million Americans serve as the primary caregiver for their aging parents, and this phenomenon isn’t just a moment in time; it’s a growing trend. The number of family caregivers is expected to continue growing as more baby boomers transition into retirement years. Projections show that by 2040, more than 80 million Americans will be age 65 or older. The Sandwich Generation, which mostly consists of older Generation Xers and younger baby boomers, experiences both emotional stress and financial challenges as over-wrought caregivers. Their time and attention are divided; their finances strewn across checks, cash and credit card charges. All the while, they are trying to save and plan for their own retirement. Older Parents On average,…

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What Could Tariffs Mean For The Economy — And Your Investments?

Overview On May 30, President Trump threatened new tariffs on all goods imported from Mexico. Effective June 10, the U.S. would levy a 5% tariff, increasing the rate by an additional 5% each month until reaching a permanent rate of 25% by October. The president stated that tariffs would only be lifted “if the illegal migration crisis is alleviated through effective actions taken by Mexico.” On June 7, after several days of negotiating with Mexican officials andjust three days before the tariffs were set to go into effect, PresidentTrump announced the tariffs would be “indefinitely suspended.” These announcements came in the middle of the trade war with China, which has been brewing since mid-2018. The U.S. and China have yet…

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