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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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Fed Governor Kugler Details Inflation And Economic Outlook
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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
Confounding Valuations Of The Largest Five Companies In S&P 500
Published Wednesday, July 21, 2021 at: 9:49 AM EDT
The most important measure of the financial strength of the United States is the Standard & Poor’s 500 stock index. It’s widely watched but constantly surprising.
Of the 500 companies in the S&P 500, the five largest account for 21% of the total value of the much-watched index. You won’t believe where they are currently valued!
Ranked by market capitalization, the five companies are: Apple, Microsoft, Amazon, Google, and Facebook. The Big Five are trading at low PEG ratios, relative to the other 495 stock stocks in the S&P 500 index.
The average company in the S&P 500, as of July 9, traded at a PEG ratio of 3.3%, while the Big Five traded at a PEG ratio of just .98% -- a large discount to the other 500 companies in the S&P 500.
Wikipedia attributes development of the PEG ratio to Mario Farina in a 1969 book. A PEG ratio is a company’s price/earnings ratio divided by its earnings growth rate for the next year. A PEG ratio adjusts the traditional price/earnings metric for valuing a company’s stock by accounting for its expected earnings growth rate.
These five stocks may appear expensive relative to the S&P 500’s average P/E ratio of 22.8, but their earnings growth rate is reflected in the PEG ratios and they are cheap by this important metric relative to the other 495 companies in the index.
For example, the expected earnings growth rate for Amazon is 73%. Amazon's PEG ratio is 0.9% versus the S&P 500's PEG ratio of 3.3.
Stocks are risky investments and they are volatile. Just yesterday, the S&P 500 suffered its worst one-day decline since May, sliding more than 2% during the day before closing down 1.6%. The index shot back up by 1.5% today.
Uncertainty about the risk of the Covid-19 variant as well as inflation are likely to cause big drops in the S&P 500 in the days ahead. Yet stocks are the growth engine of a retirement portfolio and a key in a comprehensive tax-smart investment plan built to last the rest of your life. With volatility high and tax laws about to change, please consider whether the next stock selloff could be a long-term planning opportunity.
The table entitled, “Valuations Of ‘The Big Five’ Versus S&P 500,” was derived from a class for financial professionals by Fritz Meyer, an independent financial economist, on Advisors4Advisors on July 13, 2021.
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