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Slick TV ads often make financial planning and wealth management sound simple, but it’s usually not. Managing wealth requires knowing a lot about highly technical topics, like taxes, government regulations, and finance as well as history, psychology and how to communicate with loved ones about sensitive issues. This article highlights some of the knowledge needed to manage wealth and why it’s often so daunting without the help of an independent personal financial advisor who is familiar with your situation.
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Understanding The Federal Reserve Mandate To End Inflation
The Federal Reserve System, the nation’s central bank, has a dual mandate to pursue maximum employment and maintain price stability. These two priorities are currently treated equally, but that was not always the case. In fact, the Fed’s bias toward maximizing employment was a critical driver of the stagflation that plagued the U.S. in the late 1960s and 1970s. Recognizing the need to balance price stability and maximum employment, in 1977, Congress revised the Federal Reserve Act.
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Fed Governor Kugler Details Inflation And Economic Outlook
The 12-month inflation rate, as measured by the personal consumption expenditures (PCE) index, was 2.6% in December, down from its peak of 7.1% in June 2022, and the six-month rate for PCE inflation was even lower, at 2%, which is the target rate set by the Federal Reserve.
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Why Rates May Not Be Cut Until June
The cost of a loan to buy a home, car, college education, and achieve the American Dream is staying the same for now. As expected, Federal Reserve Chairman Jerome Powell said the central bank did not lower loan rates following the Fed’s Wednesday, Jan. 31, 2024, policy meeting.
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Practical Suggestions For Achieving Your 2024 Resolutions
New Year’s resolutions usually fail because they‘re often too hard to achieve. After six months, only 10% of people who make resolutions achieve them or remain committed to them, , according to a study by Dr. Mark Griffiths, a Chartered Psychologist and Distinguished Professor of Behavioral Addiction at the Nottingham Trent University. What can you do to make financial, medical, or other personal resolutions more likely to be achieved?
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A Sign Of Progress In Solving U.S. Economic Problems
The Federal Reserve appears to be pulling off a feat most experts did not believe it could: ending its aggressive inflation-fighting campaign of 11 interest rate hikes without tipping the U.S. economy into a recession.
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Fed Keeps Rates Unchanged; Expects Easing In 2024
To promote transparency and free markets, the Federal Reserve System began publishing the opinions of the 19 U.S. central bankers that decide interest rate policy.
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Have You Logged Into Your Social Security Account?
Have you logged in to your Social Security account? Creating an online account at SSA.gov is an important first step in understanding your retirement income situation. However, only about 60 million of the 160 million individuals in the U.S. labor force who have Social Security accounts have created a way to access the Social Security Administration’s website.
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The Great Fake Out Of 2023 Is Poised To Extend Into 2024
All year long, the economy and stock prices have fooled experts and consumers, outperforming expectations month after month.
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Test Your Financial Planning IQ
The five questions below are a challenge meant to allow you to assess your knowledge of investing, tax and financial planning. If you have been following our news stream, this quiz draws on familiar ground. The answers are below.
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Planning Briefs
Everything You've Learned About Interest Rates May Be Wrong
Published Wednesday, May 9, 2018 at: 7:00 AM EDT
In the long arc of financial history, Americans are coming off a 50-year aberration and returning to normal interest rates.
The last 50 years represent an aberration of U.S. financial history in the context of the last 171 years. In the long arc of financial history, lessons learned over a lifetime may be wrong.
Though double-digit rates are a fear investors have dealt with for five decades, history indicates it is unlikely to occur in our future anytime soon. Beginning in the late 1960s, a 25-year period of rising intertest rates was followed by a 25-year period of declining rates, completing only in recent months a 50-year cycle highly unlikely to repeat itself anytime soon.
The yield on a 10-year U.S. Treasury bond, in the grand sweep of history, averaged about 4% annually. That's normal. Mortgage rates of the 70s, 80s, or 90s were abnormal.
The "new normal" ironically is the old normal. No wonder the financial press is confused.
In late March, when the 10-year T-bond yield topped 3% for the first time since 2014, it sparked a spate of headlines about the risk of rising rates. Such fears may be misplaced, using the 171-year history as a guide.
The new normal may be a 2% inflation rate and a 10-year bond yield of 4%. Headlines evoking fears that a 3% yield on 10-year T-Bonds portends 1980s'- or 1990s'-style inflation and a rise in interest rates are unlikely in the years ahead.
The Fed is expecting the 10-year Treasury bond to revert to the long-term mean of about 4% in 2020. Once a quarter, the Fed releases its interest rate policy, plan, and projection. Based on the Fed's plan and forecast, the Fed Funds Rate is targeted to hit 3% in January 2020. The Fed could be wrong, but it's not wildly wrong and it's what you should expect. Despite your life experience and widely-held notions, interest rates over the next decade probably won't be anything like what you've experienced before.
To be clear, your experience in fixed-income investing has been framed by an outlook based on aberrantly high rates. A reversion to the 100-plus year mean Fed Funds Rate is expected by the Fed. Thus, investing based on your experience isn't enough now; understanding the future of interest rates requires historical perspective. As a financial professional, our experience in investing is informed by the long arc of history.
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