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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
Staying Realistic About Investing Amid Volatile Market Swings
Published Tuesday, April 9, 2019 at: 7:00 AM EDT
Despite the way securities traditionally are sold and what you hear in the media, the stock market confoundingly defies prediction. Look at the two quarters ended March 30th, 2019: The 19.8% plunge in the Standard & Poor's 500 index in the fourth quarter of 2018 was a flash bear market; in the first quarter of 2019, a recovery was just as swift, a snapback gain of 13% gain. If whipsaw emotional shifts from fear to greed make it harder to stay realistic about what to expect from a prudently-designed retirement portfolio, this chart offers a way to know what to expect based on historical data.
This chart shows the returns of four asset classes as well as a portfolio invested in a mix of the four. The returns are based on the average annual return of each asset in the 93 years from 1926 through 2018. Of the four assets, the best performing were large-company stocks, as measured by the Standard & Poor's 500 index, which averaged a total return of 9.9% annually over the 93 years.
Each group of bars shows how often the four asset classes and the diversified portfolio achieved or bettered the long-term return of that particular asset class — 9.9% for large-cap US stock, 11.08% for small-cap US stock, 5.24% for US bonds, 3.39% for US cash, and 9.23% for a 4-asset portfolio — over rolling periods of five years versus 10, 15, 20, and 35 years.
For example, large cap stocks gained 9.99% or more in 92% of the 59 35-year rolling calendar-year periods that occurred between 1926 and 2018. In comparison, the 9.99% return for large cap US stock was only achieved in 57% of the 89 rolling five years periods from 1926 through 2018.
The longer holding periods are the tallest bars, showing that the longer your time horizon, the more likely you were to achieve a long-run return.
Craig Israelsen, Ph.D., who compiled the data in this chart, has taught thousands of college students as well as financial professionals about low-expense portfolio design, says he would be the first to admit that what is happening now may not be your experience in the near future. But, over long periods of time, certain asset classes generally deliver their "mean" return.
"Investors are reminded always that past performance is never a guarantee of your future results," says Craig Israelsen, Ph.D., who compiled the data in this chart. "Yet, having just been through an emotional whiplash, investors get important perspective in knowing a diversified 4-asset portfolio averaged a 9.23% return or higher in 86% of the 59 rolling 35-year periods from 1926 through 2018 with just 76% of the volatility of large-cap US stock."
Performance of US Large Stock represented by S&P 500 Index (TR), US Small Stock represented by S&P Small Cap 600 Index (TR). US Bonds are represented by Barclays US Aggregate Bond Index TR USD, and Cash by USTREAS Stat US T-Bill 90 Day TR. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss.
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