Should I Sell My Stocks?

If during a two week summer vacation, you heard that there was an escalation of tensions between the US and Korea; two international terrorist attacks; a US domestic terrorist attack; a looming debt ceiling crisis; and political upheaval in the White House, you might think that US stock markets would be in free-fall. You would be mistaken. Although markets were down over the most recent fortnight, the damage was fairly limited—about two percent overall. Even with the recent declines, the S&P 500 remains 8.3 percent higher on the year and just 2.2 percent below its record high, while the NASDAQ is up 15.5 percent in 2017. Given these numbers, its not surprising that the most frequently asked question that I have fielded over the past month has been, “I can’t believe that market is doping so well, considering (fill in the blank)…SHOULD I SELL MY STOCKS?”

Personal Finance 101 for College Kids

As millions of parents prepare to send their kids off to college, it is critical that they communicate about safety, hygiene and of course study habits. But it is also important that they discuss money and communicate to their kids that they are responsible for their finances and should act accordingly. Here are the introductory topics to cover: Money Management 101: Each family will create a different system for managing money, but in my experience, the most successful plans start with the creation of a realistic budget. You will then need to discuss what the parental contribution (if any) will be. From that point, parents may choose to provide the student with a lump sum for the semester, though I recommend a monthly allotment, which should help young adults get used to managing finances in the same that they will do so after college.

Electric Shock Spending Therapy

Regardless of how much money you earn, cash flow is the foundation upon which most of financial planning is built. Understanding what’s coming in and going out can help you determine what is available to fund various goals, including debt pay-down, college funding and retirement planning. That’s why nearly every CERTIFIED FINANCIAL PLANNER™ professional (CFP) will start a client relationship asking about how much money you spend today. If you don’t know, she may encourage you to create or adhere to some type of tracking system. Cash flow is probably the least sexy part of planning. In many ways, it’s like dieting and exercising because it relies on self-control and discipline. The best personal trainer can create an effective work out regime, customized to your body type, but she can’t force you to do the squats and dead lifts. Similarly, a nutritionist can design a diet plan that will help you manage your weight, but only if you stick to it.

BlogMark TalercioAugust 9, 2017cash flow, CFP, CFP Professional, Pavlok, Spending

Can Money Buy Happiness?

“Money can’t buy happiness, but it can make your misery a little more comfortable,” or so my father once said. I have also come to believe that while money can’t buy happiness, it can buy you options. For example, with enough in savings, you may be able to make a different career decision, or you may have peace of mind that allows you to feel free from an employer’s whim or an industry’s downsizing and of course, money may allow you to retire early. But what about that jolt of glee that you feel, when you sit in a brand new car or slip on that sparkling piece of jewelry? Psychologists and behavioral economists have conducted studies, which have shown that despite a shot in the arm that a purchase or even a gift can provide, the happiness boost does not last that long. There is actually a name for this: The Hedonic Treadmill.

4 Ways to Manage Investor Risk Amid Low Volatility

If you’ve been thinking that stock markets have been pretty quiet in 2017, you are right--it's been more like the merry-go-round and less like a rollercoaster. Through the first seven months of the year, none of three major stock market indexes has fallen by more than 5 percent. And one gauge of market movement, the CBOE Volatility Index (VIX), which measures investors’ expectation of the ups and downs of the S&P 500 Index over the next month, recently dropped to its lowest level in 24 years. Low VIX readings have tended to be equated with muted anxiety and high stock prices. Amid this environment, you might be wondering what could go wrong? There are always risks that persist and while their existence does not mean that long-term investors should change their game plans, they are a reminder to guard against complacency and to always approach investing with caution.

BlogMark TalercioJuly 31, 2017CBOE Volatility Index, investor, Market Volatility, Markets, Risk, VIX, volatility

Reverse Mortgage Pros and Cons

As house prices have increased, many older Americans may be tempted to tap the equity in their homes with a reverse mortgage, which is a loan that allows homeowners 62 and older to convert a portion of the equity in their homes into cash, as long as the home remains their primary residence. Most reverse mortgages are offered through the Department of Housing and Urban Development and are guaranteed by the Federal Housing Administration (FHA) through a program called Home Equity Conversion Mortgages (HECM).

What Could Go Wrong for Investors?

If you’ve been thinking that stock markets have been pretty quiet this year, you are right. Through the first seven months of the year, none of three major stock market indexes has fallen by more than 5 percent. And one gauge of market movement, the CBOE Volatility Index (VIX), which measures investors’ expectation of the ups and downs of the S&P 500 Index over the next month, recently dropped to its lowest level in 24 years. Low readings have tended to be equated with low anxiety and high stock prices. Amid this environment, you might be wondering what could go wrong? There are a number of risks to the US and global markets that persist. Their existence does not mean that long-term investors should change their game plans, but they are a reminder to guard against complacency and to always approach investing with caution.

BlogMark TalercioJuly 23, 2017central banks, ECB, Fed, Federal Reserve, Inflation, investors, Janet Yellen, Stocks, volatility

Social Security, Medicare and Medicaid Q&A

Just in time for the upcoming anniversary of The 1935 Social Security (SS) Act, the 2017 Annual Report of the Board of the Social Security Trustees is out and once again, the news is sobering. “Both Social Security and Medicare face long-term financing shortfalls under currently scheduled benefits and financing.” Additionally, the debate over health care has put Medicaid in the spotlight, so it’s time for a Q&A on three of the largest components of the federal budget, which account for about $2.4 trillion of spending.How is SS funded? It’s a pay as you go system, funded by payroll taxes (the FICA line item you see on your pay stub). Every employee (and employer) pays a 6.2 percent tax on earnings up to a limit, which is currently $127,200. If you are self-employed, you have to pay as both the employer and the employee, for a total of 12.4 percent.

3 Economic Risks

During her Congressional testimony, Fed Chair Janet Yellen painted a fairly bright picture of the US economy, stressing a rebound in consumer spending, which should allow the central bank to gradually raise short-term interest rates over the next few years. Investors were heartened to hear that message and drove stocks higher, with the Dow closing at a new all-time high after Yellen’s first day of testimony. What could undo this rosy picture? There are a number of risks to the US and global markets that persist, though three rise to the top of the list. Their existence does not mean that long-term investors should change their game plans, but they are a reminder to guard against complacency and to always approach investing with caution.

BlogMark TalercioJuly 15, 2017bonds, Economic risks, Economy, Fed, Federal Reserve, Janet Yellen, Risk

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