Walking Up Interest Rates

To keep with the theme of walking, and because this week the US Federal Reserve “walked up” its benchmark interest rate, a brief discussion is warranted about interest rates, recessions, and the economy. By the way, the weather is HOT as heck, so today’s is a shorter post.

In the accompanying photo please note the mountains in the distance – which could be equated to higher ground, higher prices, and higher interest rates. The walkers seem not to be panicking (yet) because it is early in the higher interest rate progression. Think:

Higher interest rates in the short-term for,

  • Home mortgages
  • Car loans
  • Credit cards.

Continue reading “Walking Up Interest Rates”

A Game of Chicken?

Will the Fed raise interest rates aggressively? Or will the economic threat of recession force the Fed to slow its pace of rate increases? The outcome in what is shaping up as a sort of “game of chicken” remains to be seen.

Inflation is raging – there is no question. Prices of items as basic as eggs, butter and milk are increasing at crazy high rates. This is not to mention price increases for meat and produce. Gas prices have become crippling, just as workers return to corporate offices even part-time. Restaurants are still raising prices for diners. Home prices are still going up, although the recent rise in mortgage rates may cool the craziness. Wage increases are still happening (and not keeping up with inflation but also feeding into inflation) although there may be moderation in wages coming. The list goes on.

The Fed has good intentions to adjust rates to as ideal a level as possible to tame inflation while avoiding a deep recession.

Continue reading “A Game of Chicken?”

Reviewing Crypto Quarterly – Vol. 2

Today’s edition is a review of Crypto from early April 2022. TGIF 2 Minutes will return with new content in early July! Read on for:

  • A high-level update & follow-up on cryptocurrencies
  • Brief comments on Inflation & 1st quarter 2022

Crypto Update

Continuing with the whirlwind of interest generated by “To Crypto Or Not To Crypto” and “Crypto Superbowl” there is more to say including highlighting the recent 36% decline in Bitcoin since November 2021. There is broad evidence that high-profile, fiduciary financial advisers are hesitant – for good reason – to include cryptocurrency across the board in client portfolios. At the same time, a good number of high-profile, responsible, fiduciary financial advisers are including cryptocurrency in some – emphasis, “some” – client portfolios, depending on the client’s goals and risk tolerance.**

Continue reading “Reviewing Crypto Quarterly – Vol. 2”

Looking Back On… Money & Therapy

Money and Therapy: two things that people may love or hate thinking about. However, among other things in life, money and therapy help. 

About five years ago I read a must-read book for young and old, wealthy, or building wealth, married or single. Anyone who wants to have a “life” someday… or even have a life NOW. The book is called The Number* and was written by Lee Eisenberg nearly 15 years ago but reads like he wrote it yesterday.

Here are several of the chapters:

  • “Welcome To Numberland”
  • “Debt Warp”
  • “Alone At Sea”
  • “Covering Your Assets” (nice play on words)
  • “Night Sweats”
  • “Deep Breathing”
  • “Bottom Lines”

All of these topics could be covered in conversations with friends, or by reading The Number, explored in a therapy session… or all 3! I recommend all three (and the therapy session could be with your financial adviser – because a real financial adviser makes this conversation mandatory.)

Continue reading “Looking Back On… Money & Therapy”

Series I Savings Bonds, Yes 9.62%

“What are I Bonds?” Thank you to a growing number of curious and smart clients, friends and colleagues for hammering this question enough over the past several months to warrant a TGIF 2 Minutes dedicated to I-Bonds. The “I” in I Bonds stands for inflation, which is why these bonds are so HOT at the moment. (Note: inflation overall is clearly not a good thing; I Bond interest rates may be one of the only things that benefit from skyrocketing inflation.)

Inflation is higher in 2022 than it has been in over 40 years – longer than lots of TGIF 2 Minutes readers may have been alive, and certainly longer than lots of readers have been working for, earning, and spending “real money”.

The “I” in I Bonds stands for inflation, which is why these bonds are so HOT at the moment.

Continue reading “Series I Savings Bonds, Yes 9.62%”

Slaying Inflation & Stagflation

Stagflation. An economic condition not experienced since the 1970’s – which was also the last time that inflation was as high as it is today.

Stagflation is an understandable word: stagnated growth coupled with persistent, high inflation. Often high unemployment is also part of the picture but presently is not the case. The reason stagflation is currently in the conversation is that in addition to current high levels of inflation, there are potential factors that could weigh even further on the US economy: tax increases and greater government spending. Stagflation could result – or could be inevitable no matter what.

Higher interest rates and focused policy today could be a small price to pay for a more balanced future with modest growth and less inflation.

Continue reading “Slaying Inflation & Stagflation”

Murphy’s Law & YOLO Can Be Expensive

One of the most critical factors of long-term personal financial success is… guess:

  • The markets
  • Spending
  • Interest rates
  • Stock selection
  • Income level

And the answer is…. SPENDING. This fact is why a truly competent financial planner will spend the most time on discussing spending, both today and future projected, along with GOALS. (Goals are what people spend money on.)

Holding an amount of cash – un-invested cash savings – is key to surviving Murphy’s Law events.

Continue reading “Murphy’s Law & YOLO Can Be Expensive”

Taxes Make Ya Wanna Go #$%&!

Yup, it is tax season. This year as clients and friends were completing their 2021 tax returns* the cries of, “Are you kidding me?” and “This is by far the most taxes I have ever paid in my life!” were louder than ever. There were valid reasons for wealthier taxpayers paying more taxes for tax year 2021 – far more than for tax year 2020. A few reasons were somewhat UN-related to the coronavirus pandemic, and a number of reasons were directly pandemic-related.

The majority of my clients and friends simply made more money in 2021 than 2020. (Is that a bad thing? Most likely not.) The pandemic, in a delayed fashion, led to promotions and opportunities in 2021 for lots of individuals in corporate America and at companies that “dug in” amidst epic challenges in 2020. Retention and performance bonuses wound up being paid in 2021 (continuing in 2022), following a time in late 2020 when it seemed basic compensation and jobs were at serious risk. This turnaround was a huge irony and welcome relief to a number of people – and the “flip side” became higher taxes for tax year 2021.

Pandemic-related factors were to blame for higher 2021 taxes in several “hidden” ways.

Continue reading “Taxes Make Ya Wanna Go #$%&!”

Financial Satisfaction in Crazy Times

These are crazy times, almost chaotic. Chaos is defined as complete disorder and confusion – and parts of the world and our lives may be nearing that point, or at least feel that way. How does an investor get financial satisfaction in times like these? Carefully and patiently.

“Carefully” can equate to:

  • having a plan that addresses saving, spending, taxes, & investments
  • being able to monitor and adjust the plan, perhaps with an adviser
  • then continually executing the plan.

The “patiently” part can be more difficult and is just as critical.

Storms are temporary and the worst of chaos and volatility will pass – be prepared for an unknown timeframe.

Continue reading “Financial Satisfaction in Crazy Times”

Crypto Quarterly (& More) – vol. 2

Today’s TGIF 2 Minutes features:

  • A high-level update & follow-up on cryptocurrencies
  • Brief comments on Inflation & 1st quarter 2022

Crypto Update

Continuing with the whirlwind of interest generated by “To Crypto Or Not To Crypto” and “Crypto Superbowl” there is more to say including highlighting the recent 36% decline in Bitcoin since November 2021. There is broad evidence that high-profile, fiduciary financial advisers are hesitant – for good reason – to include cryptocurrency across the board in client portfolios. At the same time, a good number of high-profile, responsible, fiduciary financial advisers are including cryptocurrency in some – emphasis, “some” – client portfolios, depending on the client’s goals and risk tolerance.**

Continue reading “Crypto Quarterly (& More) – vol. 2”