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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
Reason No. 7 To Hire A Financial Professional: Rebalancing
Published Wednesday, October 13, 2021 at: 9:45 AM EDT
There are many reasons why professional advice may be best for managing your financial situation. Here’s the No. 7 reason
One of the services our firm offers is portfolio rebalancing. Periodic rebalancing is about as important to investor success as personal advice on tax-efficiency. Rebalancing your portfolio is not a sexy-sounding benefit of working with a professional, but it might affect your portfolio’s terminal value about as much as tax-smart investing advice, which is another important reason to hire an investment professional.
Automated calculators for rebalancing get the math right but getting investors to use them to rebalance once a year requires a commitment of time and an interest in personal finance as well as behavioral change. Working with a qualified professional who knows your financial goals and risk-tolerance came in handy in the period since Covid hit the U.S.
Since the pandemic hit in the first quarter of 2020, technology was the No. 1 performer of 11 S&P 500 industry sectors for five consecutive quarters but for the last two quarters was a middling performer.
The 12-month returns for the past six quarters on stocks classified by industry sectors illustrate why a portfolio rebalanced once a year by a professional is so important to investor success.
During the pandemic, both the Standard & Poor’s tech sector and the overall index were big winners because shopping online was safer health-wise. So was watching Netflix. And Google ads suddenly were attracting more eyeballs. Apple and Microsoft earnings growth was four times earnings growth on the average S&P 500 stock, according to Fritz Meyer, an independent economist. It was totally unexpected, of course.
The tech sector was the only one of the 11 industry sectors that make up the S&P 500 index to show a gain (10%) in the first quarter of 2020, when Covid hit. It was just the start. For the next three quarters, tech sector 12-month returns for stocks came in at an astonishing 37%, 47%, and 44%. It was an historic bull market kicked off by government transfer payments to consumers, and it is still in progress. But tech stocks for the past two quarters have not been dominating. They’ve now returned to the middle of the pack of the 12-month 11-sector index performance.
Successive quarters of outperformance would have allowed your tech stock position to grow unchecked and dominate in your portfolio results. With leadership shifting, a rebalanced portfolio would be better able to benefit from the change in leadership in the past two quarters.
There are many ways to rebalance a portfolio. Rebalancing based on a portfolio’s industry sector weightings is shown for illustration purposes.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
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