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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
Business Owner Alert: Paycheck Protection Program
Published Thursday, April 1, 2020, 4 p.m. EST
— A cornerstone of the U.S. Government response to the economic crisis caused by the pandemic is the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a history-making $2.2 trillion law that just went into effect. With almost no strings attached, CARES extends financial support to business owners in need under the Paycheck Protection Program (PPP).
PPP is a safety net for businesses with fewer than 500 employees — mom and pop shops, restaurants, professional services and other small businesses that created 70% of the new jobs in the U.S. in the past decade — the vast majority of which have 10 employees or less. Self-employed and contract employees also qualify for PPP.
PPP provides small businesses with funds to pay up to eight weeks of payroll costs including:
- Salary and wages
- Commissions
- Tips
- Paid leave
- Health insurance and healthcare payments
- Retirement benefit payments
- Some independent contractors
Funds can also be used to pay interest on mortgages, rent, and utilities. To be clear, as long as you use the loan proceeds to pay for qualified expenses within eight weeks, the loan is forgiven.
- Funds are provided in a loan that may be fully forgiven if used for payroll costs, interest on mortgages, rent, and utilities.
- At least 75% of the forgiven amount must have been used for payroll.
- Loan payments will also be deferred for six months.
- No collateral or personal guarantees are required.
- The government will pay the origination and other costs for administering these loans.
The maximum PPP loan you are eligible to receive is 2.5 times your average monthly payroll for the past 12 months for the eight-week period, subject to these key limitations:
1. If you pay more than $100,000 a year to an employee, the excess over $100,000 does count toward the maximum you loan you qualify to receive.
2. The maximum loan a company is $10 million.
For example, if you paid 10 employees $1 million for the past 12 months, then your average monthly payroll for the period was $83,333. Your maximum loan would be 2.5 times the $83,333 in monthly payroll, or $208,333.
The loan will be forgiven, but you must use the proceeds to pay these qualified expenses within eight weeks:
- Payroll
- Group health care benefits
- Salaries
- Mortgage
- Rent
- Utilities
The loan amount that is forgiven will not be subject to tax and you also can deduct it as an expense, putting even more power behind the PPP benefit.
PPP Compliance Caveats.
You must certify with your signature a "good faith certification" saying the loan is necessary to support the ongoing operation of your business and will be used to retain workers, make payroll, mortgage, lease and utility expenses. If you have six months of cash on hand, for example, you may not be able to certify the funds are necessary. However, some businesses may operate at a higher profit as a result of PPP relief and may still qualify for the loan forgiveness program. If you have questions about whether you can certify in good faith that the PPP funds are necessary to the ongoing operation of your business, it’s wise to consult with a qualified professional.
The intent of the law is to enable your business to continue to pay employees, including contractors, through the partial shutdown of the economy from February 15, 2020 through June 30, 2020. If you reduce your payroll, your loan amount will not be fully forgiven. Calculating how much of your loan would be forgiven after reducing your payroll requires personal, decisions about personnel and calculations by a professional.
To comply with PPP rules, you may want to segregate the loan proceeds in a separate account that your company will tap only to pay for qualified expenses.
This article does not address financial economic consequences of the Act for investors but summarizes what business owners need to know about the financial lifeline coming.
Nothing contained herein is to be considered a solicitation or research material. It is subject to change without notice. Strategies referenced herein do not take into account your personal objectives, financial situation or particular needs of any specific person. The material represents an assessment of financial, economic and tax law at a specific point in time. The sources are thought to be reliable but could be wrong about important facts.
The U.S. Government's response to the Coronavirus crisis implements new regulations and their precise impact may not be available at the time this was written or could be subject to change by U.S. Government agencies, such as the SBA..
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