In this week’s economic discussion, Larry takes us through more details about the Eurozone and Greece, looks at deficits and surpluses from the Congressional Budget Office, gives us some education on U.S. Fiscal Multipliers and ends with a picture of natural gas consumption in Europe. As usual, it is an enlightening discussion and an excellent way to learn about the economy.
Year: 2015
Stock Market Recap with Joel Javer, CFP®
Volatility is increasing in the U.S. markets making it more difficult to determine what direction your investments should take in 2015. When Oil slid from $100 to $50/barrel, the U.S. stock market rallied in anticipation that lower gasoline prices would allow consumers to spend this windfall somewhere more interesting than the pump, but that hasn’t happened yet. So far, all we’ve seen are layoffs in the oil patch and more price swings in the S&P 500. Europe is justifiably concerned about Greece and its willingness to resolve its debt crises. They keep talking and positioning as well as negotiating via the media with the Germans, but nothing significant has happened yet. So far this year, international markets have had some gains even slightly more than the U.S., but the structural problems outside the U.S. make us remain cautious. Over the past 6 years, the best place to invest your money has been the S&P 500. This index is likely a bit overvalued right now, and perhaps the international markets are a bit undervalued, but no one knows when the trend will change. It appears that the U.S. dollar will maintain the dominant currency for the foreseeable future making our exports more expensive. This does however, allow foreign companies to increase their sales to the U.S., likely making them more profitable. The U.S. has seen substantial job growth but minimal wage growth over the past year, which is encouraging news for corporate profits. We have yet to see consumer spending rebound to its pre great recession levels, but as more people get reemployed and old debts are repaid, the outlook for the U.S. appears to be the brightest around. How does this translate into your portfolio design? A large part of your portfolio will remain invested in the U.S. with some allocations hedged to the U.S. dollar in International stocks and bonds. Bond positions will remain primarily in U.S. corporations with some international exposure, but the U.S. looks like the place to be right now.
Sharkey, Howes & Javer is a Denver-based financial planning and investment management firm. For additional market updates and financial news, please follow our LinkedIn page. If you are interested in setting up a complimentary consultation with one of our Certified Financial Planners™, please call 303.639.5100 or visit shwj.com.
10 Ways to Show Your Money Some Love
In the month of love, we thought it was important to share our tips on how to show your money some love so it can help you attain your goals. While we could add many more tips to the list, the 10 below are an excellent place to start when thinking through your financial strategy.
1. Don’t Wait
“Oh, I’ll do that tomorrow… or next week… or next month.” We can all find excuses about getting fit, starting a diet, cleaning the house or… taking care of our finances. When it comes to showing your money some love, the first step is to put the excuses aside and take action. Money problems are associated with stress, relational challenges and decreased happiness. Waiting to take care of your finances only prolongs the hurt.
2. Save First
When a paycheck comes in, it can be tempting to pay the bills, buy a few things on the wish list and head out to a nice steak dinner. While it may be well deserved, saving before splurging can really show your money some love. When money is saved, it earns interest and the more interest it earns the more money you have later. Savings accounts, 401(k)s, IRAs and other investments are all part of a good saving strategy.
3. Look for Tax Free
Many retirement plans, such as a 401(k), allow you to save with certain tax advantages. Look into your employer’s retirement plan and possible matching programs, as well as other available programs such as the 529 plan for college education savings. Financial advisors, like the team at Sharkey, Howes and Javer, can be excellent resources when it comes to creating a smart saving strategy.
4. Make a Budget
A 2013 Gallup poll revealed only two-thirds of Americans prepare a detailed household budget (source). Budgeting is such an easy way to stay on top of your finances and meet your financial goals. Set guidelines for your spending in categories such as housing, transportation, groceries, medical, recreation, saving and investing. There are many free online tools that can help track spending and keep you moving towards your budgeting goals.
5. Needs vs. Wants
Along with creating a budget, it’s important to take some time to really think through your long-term goals and how your financial decisions now can help you down the road. Filter your needs and wants through a long-term lens. For example…Do you really need a new house or do you want a new house? How is purchasing a new home going to help you achieve your long-term goals? Asking yourself the tough questions now could lead to a happier retirement later.
6. Watch Your Debt
Debt can make achieving financial goals more challenging, but not impossible. The average U.S. household carries $15,611 in credit card debt, $155,192 in mortgage debt and $32,264 in student loan debt (source). If you are in the same boat as many Americans, take some time to analyze your debt and look for creative ways to pay it off. Think carefully before making big purchases or getting caught up in interest free sales. Consider meeting with a financial advisor to help you make the most of your income now and create a strategy to manage your debt while investing for the future.
7. Protect Your Identity
Our private information is being compromised more and more frequently. It seems like every day we hear of another large corporation with a data breach. Keeping close tabs on your identity can keep your money where it belongs and your credit on the up and up. Start by watching for scams. Never give out your personal information such as your social security number over email. Always call your financial institution directly if you receive a suspicious phone call or email asking for your account information. Make sure to check your statements regularly. The sooner you catch fraudulent charges, the quicker they can be resolved. See more helpful identity theft resources on our website >
8. Plan for the Unexpected
Showing your money some love also means saving for a rainy day. Consider starting an emergency fund with 3 to 6 months of living expenses saved. Consider putting your funds in a savings account, or a money market account, where it can be easily accessed in the event of a job loss, medical challenge or other unexpected tragedy. It is also important to let your trusted family and loved ones know where your funds are and how to access them in the event you are unable to.
9. Find a Friend
Perhaps the best way to show your money some love is by finding it a friend you trust. Financial advisors, especially advisors who don’t work on commission, can become your money’s best friend. Starting to work with a financial advisor early will help keep you on track as you work toward your long term goals. When looking for an advisor, ask your friends and family members for referrals, but also be sure to take a hard look at their strategies, team and BBB ratings to make sure they align with your goals. For more on finding the right financial advisor, check out our post: 3 Questions to Ask When Choosing a Financial Advisor.
10. Don’t Give Up
Taking good care of your finances is a process. We will all experience some missteps and setbacks along the way. No matter what, it’s important to persevere. Maybe you have a year where the markets don’t cooperate. Reevaluate your investment strategy and try new tactics in the next year. Or maybe you have a longer period of unemployment than your emergency fund allowed for. With the right planning and the right team, you can rebound. Showing your money some love isn’t a one-time event. It’s a lifelong commitment, and with diligence your money will love you back in the long run.
In conclusion, we want to remember while money is a part of our lives, it shouldn’t consume our lives. Take the time to show your money some love using these tips so you can focus on what’s most important in your life.
What tips would you add to the list? Comment below!
Inside the Economy with SH&J: February 2, 2015
Continuing in our economic discussion series, Larry Howes discusses the U.S. and Global economy. This week he shows us our first hint of the 4th Quarter U.S. GDP, shares some interesting insight into the Colorado energy industry and talks about troubles in Japan, plus much more. Just 10 minutes this week and highly educational! We would love to hear your comments and questions in the comment section below.
How much should I save for college?
Most of our clients are saving for college at some point during their time with SH&J. Some are saving for their children and others for their grandkids. As Harold highlights in the video, the number one rule when saving for college is:
Save for retirement first.
That said, when you are looking at how much you should save, consider the following factors:
- Private or public college
- In-state or out-of-state tuition
Working with a financial planner can help you look at these factors along with your retirement and other financial goals to decide on the best path for your college savings goals.
At SH&J, we usually start with 529 plans for college savings. 529 plans:
- Receive federal & state tax breaks
- Are low maintenance
- Allow you to maintain control of the funds
- Grow tax free as long as the money is used for college education
Take a look at our College Planning page for more information about 529 plans and other college saving questions.
If you are looking at saving for college soon, we’d love to meet with you to hear more about your goals. Give us a ring at 303.639.5100 and let’s set up a time.
2014 Q4 Quarterly Commentary
In our quarterly reports to clients, we always include commentary on the markets, economy and other financially relevant information. Our 2014 Q4 reports recently went out, and we wanted to share our commentary with you as well. We would also love to hear your questions and comments in the comments section below.
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New Year’s Resolution – “Do More of What Makes You Happy”
We think that would be a good resolution. However, focusing on the financial markets around the world will rarely help! The Media elicits emotions that cause lots of dissatisfaction and fear.
In 2014, for example, few categories did as well as big blue chip American companies. The S&P 500 index did great, so now the news is full of advice about how you “should” have invested! Of course with us, you DID invest in the S&P 500 – and your diversified portfolio also invested in bonds and other assets worldwide. Remember 1987, 2000, and 2008 when the S&P 500 was, as the pundits later agreed, the one place to avoid investing in – EVER AGAIN! (Source)
Our society seems to love being unhappy about markets! “Are they going to correct?” Yes – we just don’t know which ones, when, and how badly. “Did we miss out on the ‘best performance of the year/decade/century?” “Which asset class was the one we should have exclusively chosen?”
If you had thought that the S&P 500 was the best place to be in 2014, think again. The top performing market of 2014 was China (up 44%)! Who would have guessed?!
We saw a fascinating report from the Medical Media about that other perennial New Year’s resolution – wanting to lose weight. There exist as many, if not more, diets as there are sure fire ways to “beat the market”. The American Medical Association threw up its hands and opined that although all diets may work, the only one certain to do so is “the one the patient will stick with!” We think that makes a lot of sense, and we try hard to design investment portfolios that “the client can stick with.”
2015 will probably be the year the Federal Reserve raises interest rates – very carefully (Source). We expect that our US bonds and stocks will weather the change well, despite turbulence and dire headlines.
Inside the Economy with SH&J: January 19, 2015
On Monday, January 19, we had our second economic discussion of the New Year. We covered many interesting facets of the economy including oil, global unemployment, China and more. Listen in and share with your family and friends. We would love to hear your comments and questions in the comment section below.
3 Questions to Ask When Choosing a Financial Advisor
Finances are intimately woven into our lives. Choosing a financial advisor to guide you in your financial decisions can be a stressful process, but an important one. Having the right financial advisor on your team gives you peace of mind and can put you on a good financial path.
Whether you are looking for a financial advisor for the first time or you are looking for a new advisor, here are some key questions to ask:
1. How are you compensated?
Starting with this question is key to understanding the type of financial advisor you are working with. They should be able to answer the question quickly and with specifics. Are they receiving kickbacks for recommending certain investments? Do they have sales quotas to meet? Are they paid by salary or commission? Are they recommending the same investments to all of their clients? Why or why not? A planner who is paid by commission or sales versus a salary or hourly rate could have an incentive to steer you in a specific direction.
Ask for information about all of their fees and how much you will be paying per transaction, product and service. Also, ask about any additional fees you can expect from other services they offer. If the advisor is unwilling to answer or vague in their responses, consider looking elsewhere for a financial advisor. Continue reading
Take Eileen Sharkey’s Financial Literacy Course
Each year, Eileen teaches an interesting eight part financial literacy course to groups here in Denver. The course is well attended and very informative for those who attend. We know not everyone can be there in person, but wanted all of you to have access to the wealth of information provided throughout this class, so we recently videoed the class and posted it online for viewing. Each part of the eight part series is about 45 minutes to an hour long and well worth the time.
We encourage all of our clients, their children and their friends to take the time to ‘attend’ Eileen’s class via our website. If you complete all 8 sessions, please email us to let us know so we can congratulate you with a Certificate of Completion.
Click here to be taken to the series or watch part one of the series below.
Inside the Economy with SH&J: January 5, 2015
On Monday, January 5, we had our first economic discussion of the New Year. Listen in and share with your family and friends. We would love to hear your comments and questions in the comment section below.
Sharkey, Howes & Javer Blog 