Category: Retirement

Interest Rates, The Fed & Market Highs

Today’s edition of TGIF 2 Minutes is worth a comparison to this past February’s archives – just 6 months ago – and was originally titled, “Interest Rates, The Fed & Gray Hair.” In today’s re-run, readers will learn that the US Federal Reserve lowering interest rates is not the only mechanism able to cause the stock market to go up. Sometimes markets go up due to other factors including momentum or continued consumer spending, as in the past 6 months.

Question asked in February 2024:

How soon might the US Fed lower rates and how fast might the markets keep going up or falter down?

A certain amount of gray hair (read: wisdom and experience) helps in understanding the current interest rate and US Federal Reserve environment. Why? Because economies do not move as fast as same-day or even same-month. And “gray hairs” know this.

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The Luxury and Cost/Value of Travel

Today, my favorite airplane image (above) represents landing in a remote vacation destination…

Just thinking about an upcoming or off-in-the-distance trip or vacation can create excitement and the feeling of anticipated relaxation. Travel can be a gift we give ourselves or travel may be necessary, as in to see family for a graduation or birthday celebration. No matter what, there are deep benefits to travel and vacations… and costs and intangible value to consider.

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Elections, Debates & Markets

As this edition of TGIF 2 Minutes was written prior to the first US Presidential debate, one piece of the “proof” will already be in the pudding for readers post-debate on Friday morning. Though not much should matter to markets related to the debate.

For the sake of thought and discussion elections can matter to stock and bond markets in the short- to intermediate-term. Debates – and State of the Union speeches – may (and may not) matter in the short-term as well. Big-picture policies like taxes, healthcare (drug prices and insurance coverage), social security, Medicare policy, government spending and more… these are all mentioned in presidential debates and speeches.

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Mid-Year & Critical Decisions

Mid-Year is an important time to review several significant saving and spending decisions, possibly affecting taxes too. There are slightly over 6 months remaining in the tax year – enough time to make a meaningful difference. Consider:

  • Amounts being deferred from compensation pre- or post-tax into 401k and other retirement accounts (and whether to max out?)
  • Savings goals versus reality
  • Savings goals in need of formation from scratch
  • College savings account contributions
  • Creating and funding Trusts

These and other important decisions can be evaluated and adjusted with just over half a year remaining to accomplish goals or mini-goals.

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Getting Paid to Take Risk

In true TGIF 2 Minutes fashion, a short note today – with further thoughts to follow.

A week ago, I had the distinct honor to set foot onto “Omaha Beach” in Normandy, France to recognize the 80th anniversary of the Allied Troops storming that beach on June 6, 1944, in the name of (future) freedom – and potential success – for multiple generations of free people around the world. The experience and the trip surrounding the experience left an impression that will not soon wear off.

Les Braves Omaha Beach Memorial on the Beach in Saint-Laurent-sur-Mer, France.

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Summer and Stock Markets

Upon the unofficial start to summer and the Memorial Day holiday earlier this week, the phrase, “Sell in May and go away… but remember to come back in November” may be a historically uttered phrase. Perhaps the phrase had slightly more significance before super-diversified mutual funds, ETFs and indexes entered the picture, but there are still believers in the concept.

More pronounced are data combining the old “sell in May” theory with the 3rd year of a US Presidential cycle.* Although last year’s late year 2023 gains – so far – cannot touch the strength of 2024 which is the 4th year of a US Presidential cycle.

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10th Anniversary Edition!!

Hooray! TGIF 2 Minutes has entered its 11th year! It has been an absolute joy to hear from readers over the past 10 years and be part of your Friday morning cup of coffee or weekend reading time. For kicks, below is an excerpt from the very first edition in May 2014:

Good morning and TGIF,

In my efforts to give you Short & Sweet messages that make a POSITIVE difference in your LIFE, I am starting a “TGIF 2 minutes”. It will not be every Friday but when there’s something to say, it will be on Friday when you may have an extra 2 minutes in your day- or weekend- to read it. It will be worth reading! Please let me know your thoughts.

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Lack of Clarity = Volatility

Markets prefer certainty. In times of relative economic certainty, market trends can be more defined and steadier. In times of economic uncertainty, markets react with volatility similar to the past 6 to 7 months. Two simple pieces of data:

  • The 10-year US Treasury yield was as high as 5.0% in late-October, then as low as 3.79% just after Christmas, then back up to 4.28% in March and very recently higher to 4.68% a mere few days ago. These levels – and the speed with which they have changed – represent fairly massive volatility based on historical 10-year US Treasury rates.
  • In the US stock markets, there has been similar volatility in both small-company indexes and the larger-company S&P 500 since last year with a noticeably weak 3Q 2023 and then all-time highs taking place just this past April 2024.

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A Cost That Cannot Be Underestimated

Guess what might be one of the most painfully underestimated costs of all? If you guessed healthcare and end-of-life care you are correct. Read on for a handful of reasons why it can be dangerous to avoid addressing this topic.

First a brief introduction. Anyone who has been a direct or indirect care giver for an aging relative or friend knows the pain and stress that can be involved. Of course, there are joyful care relationships, which ultimately are the goal. Where the difficulty begins is in estimating the costs of later-in-life care. Then, even worse can be executing the logistics of care and the ultimate reality of having to pay for – or running out of funds to pay for – care, whether for oneself or a spouse or relative. Timing is often almost completely unpredictable.

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“Stupid” Money Decisions

It is possible to go through life without making a stupid decision about money. Said no one ever. The truer statement might be: everyone reading today has at one time made a stupid decision about or with money. Most people have made multiple stupid decisions about money and much more. The important part (possibly after difficult pain or regret) is to be able to answer the question: what lessons were learned?

Two weeks ago, a famous Nobel Prize winning psychologist, who spent his life studying the human mind and decision-making, died. Daniel Kahneman reluctantly accepted the title “economist” as he and his long-time research partner, Amos Tversky, wrote an amazing, internationally best-selling book, Thinking, Fast and Slow. Together Kahneman and Tversky were pioneers in the field of behavioral psychology. Along the way, behavioral psychology was applied to all sorts of economic and investing decisions and the two psychologists were consulted by business leaders around the world. Here are a few of the questions the two men studied over decades, with a few of their answers: Continue reading ““Stupid” Money Decisions”