Tag: Savings

Tariffs, Car Payments & Cell Phones

Tariffs. Car payments. Cell phones. What do these three things have in common? All three are currently on most people’s minds, and two are expensive considerations for every person’s or family’s financial plan.

As for tariffs, the uncertainty around where tariffs, and now also tax legislation, will settle in is on most people’s minds. Tariff “policy” is still in the throes of global negotiation and lack of clarity. Will the US consumer benefit in any way? Will tariffs lead to continued painful inflation in the US? What about future economic relationships between the US and the rest of the world? Much is up in the air. Certain companies and business owners are in flux regarding future investment and decision-making. Meanwhile, overall, employers and consumers seem to be plodding along in a net-net positive direction.

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The (Almost) Aftermath of Inflation

Inflation is not entirely gone yet. BUT – it could be worthwhile to try talking about it in the past tense and examine what enduring inflation has dealt – both negative and possibly positive – to spenders, savers and investors.

For one thing, inflation has gotten our attention! There is not one friend or client with whom I speak – those with money to burn and those with stricter budgets – who has not been shocked by food prices the past two and a half years. Are there any “silver linings” to this situation? What have been the worst consequences of inflation?

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The Markets Are UP

At this time of the year, clients and friends love asking the question, “What do you think of the markets?” Long ago, I learned not to answer with what I believe the markets will do – because no one knows for certain what the markets will do – but rather to respond with a handful of “data points” about what events are taking place currently and what near-future events truly figure in to investor expectations.

So far this year, markets are UP. To be exact, in the first 11 trading days of 2025 the markets have been up, down and then up. On balance markets are UP 1% to 1.5% year-to-date with small companies marginally leading the way. Small companies tend to be more volatile and react positively when there is perceived value in stock prices.

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Key Upcoming Changes to 401k & IRA Rules

There are a bunch – almost too many to count – of important details that a valued financial adviser can obsess over, so clients do not have to. One of those details is the 2022 SECURE Act 2.0 which continues to unfold, in two short months starting on January 1, 2025.

A number of the changes affect rules around two items:

  • 401k saving
  • RMDs (required minimum distributions) from Inherited IRAs.

Changes to both will also have present and future tax consequences.

 

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The Election/Markets Waiting Game

This week in a conversation with one of my favorite people, I discovered – or confirmed – something that was already obvious: the US Presidential election has nearly everyone on edge. There are varying degrees of “on edge” including,

  • overwhelmed
  • nervous
  • confused
  • curious
  • angry
  • discouraged
  • (fill in the blank).

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Checklist for Down Markets

How did it feel in both 2015 and 2016 when for the entire month of January, the stock markets (the S&P 500) started the year DOWN 3.1% and down 5.1%, respectively? Isn’t January supposed to be an UP month? It did not feel great then and it doesn’t feel great at any time in the year.

The following is a worthwhile commentary and check list (from a 2014 edition of TGIF 2 Minutes) that can serve as a “gut check” for investing when markets experience months or longer periods of meaningful declines. Even if you have read these before, consider reviewing again for perspective and direction.

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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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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”

Inflation vs. Interest Rates Stand-Off

If the “land the inflation airplane” graphic (originally pictured in October 2022) indicated a US Federal Reserve trying to “land” inflation, then the current graphic would look like a slowly unfolding aborted airplane landing.

To summarize, prices of a number of key consumer items are NOT coming down fast enough to lower inflation in a meaningful way – even if the media has convinced Americans that $5 or $7 for a dozen eggs is “a relief”.

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