Finding a labor of love

In some ways, a healthy retirement relies on the proper choice of preposition. You want to retire to something – a passion or hobby – rather than from something. Want to retire so you can spend more time with your grandchildren? Great. Can’t wait to retire so you can stop working at a job you find uninspiring? Okay, but then what? Rising life expectancies and opportunities for good health have produced a generation of octogenarians who crave activities and may need some additional resources to fund them. That’s why we often recommend that the best retirements sometimes include work. We certainly condone leaving a job you no longer enjoy if you have the financial resources to do so, but, if you have no other plans, consider part-time work in a related field. Work as a consultant, tutor, freelance writer, receptionist or cashier. The wages you earn will help you avoid dipping into your retirement funds, which will give them a better opportunity to grow. Even if you’re very confident you have set yourself up financially for a successful retirement, you still might crave the opportunity to feel useful. In that case, volunteer as a coach, mentor, docent or usher. The idea is to stay active and productive. Give yourself a reason to leave your house, challenge your brain to keep it sharp and allow yourself opportunities for social connections. If you love your job and enjoy your co-workers don’t retire just because your birthdate says you can. Social Security calculates your monthly payment based on your 35 highest wage earning years. Most people earn much higher wages in their later years of employment than they did in their early years. So, the more years you work earning the higher wages, the more lower-wage years you will replace. This will boost your monthly Social Security payment (up to the highest Social Security benefit amount you can receive , which is $2,788… | Read More »

What your children need to know about money

High schools around the country are doing a much better job of providing financial education to students, but the best teaching still occurs in the home. You can start with a simple piggy bank and show your little people how to set a goal and then save to achieve it. By the time they get to grade school, children should understand these basic principles of saving and spending, but they also should begin to understand what it means to invest money in something and how and why people borrow money. Teach them about income and why a good education and training can lead to more. Children should learn how to count money, how to budget, why you should try very hard not to spend more than you make. In later grade school years you can teach them how to manage a credit card and why adults need insurance. By the time they get to middle school your kids are ready to learn about the stock market and how interest rates and inflation affect the value of money. It might be fun to pick out and track a few stocks with them and show them how they can take financial risks to make money. Middle schoolers already experience sales tax, so you can start talking to them about property and income taxes and how to factor them into your purchases and financial goals. Revisit as often as you can the idea of making and keeping a good budget plan and how to avoid paying interest rates and late fees. Talk about insurance and why people need to protect themselves. By high school, many students begin receiving a paycheck, which is an excellent opportunity to drive home the impact of taxes and Social Security on income.  Many will also be planning to apply for college and that process also offers a very necessary opportunity to discuss loans, interest rates, budgeting, and your… | Read More »

Clear it up Fridays: The Dow vs. The S&P

While it’s the oldest and most familiar index, the Dow Jones Industrial Average is not the largest and, due to the way it weights its companies and to the limited amount of companies it represents, it may not provide the best representation for how the U.S. stock markets are faring. With only 30 stocks, all of them blue chip industrials, the DJIA includes familiar companies like Johnson & Johnson, Coca-Cola and McDonald’s. By contrast, the S&P includes 500 companies with a market cap of $5.3 billion or more. Historically, the Dow and the S&P have been almost perfectly correlated, meaning they move in the same direction on virtually every trading day. Recently, though, the two indices have been tracking differently, with the S&P 500 YTD returns around 7.41% relative to the Dow at 4.28%, according to Factset. The two indices weight their companies differently, with the S&P weighting by market cap, meaning that bigger companies make up more of its value, and the Dow weighting by price, meaning that a change in the price of one stock has the same impact to the Dow as a change in the price of another. The prices are equally weighted on the Dow. A third index we track closely is the Nasdaq Composite, which includes more than 3,000 stocks that are weighted by market capitalization. More than half of the companies listed on the Nasdaq are tech stocks, and, unlike the Dow and the S&P, the Nasdaq includes some foreign-based companies. All three indices have enjoyed unprecedented success in recent years.  According to MarketWatch, since March 9, 2009, which marked the low of the financial crisis and which many consider the birth date of the current bull market, the S&P has advanced 320%, the DJIA has risen 290% and the Nasdaq  is up has soared 520%.

Clear it up Fridays: An historic bull market

Next week, you’ll be hearing a lot about an historic bull market. That’s because most analysts agree that on August 22, the stock market is likely to have avoided a 20% or more decline from on a closing basis for 3,453 calendar days making it the longest bull market in history. This calculation tracks the current bull market from March 9, 2009. On that day, the Dow Jones Industrial Average lost 80 points, or 1.2%, to end at 6,547.05, its lowest point since April 15, 1997. The S&P 500 index lost nearly 7 points or 1%, to end at 676.53, its lowest point since Sept. 12, 1996, and the Nasdaq Composite lost 25 points or 2%, to end at 1,268.64, its lowest point since Oct. 9, 2002. Since March 9, 2009, the market has not dropped 20% from its closing day high. A correction is defined as two consecutive quarters of negative GDP growth. While we celebrate this historic milestone, we’re also keeping an eye on factors that might signal a potential slowdown. The spread between the two-year treasury and 10-year treasury appears to be tightening, which can be a leading indicator for a recession (which is defined by two consecutive quarters of negative GDP growth). The market breadth is also very narrow and mostly due to the strong performance of the FAANG stocks. (Facebook, Amazon, Apple, Netflix, and Google). New home sales appear to be slowing down. Student loan and consumer debt is expanding. With strong earnings, low unemployment and a healthy economy, we remain cautiously optimistic that the record bull run will continue.

Clear it up Fridays — The Wisconsin Primary Election

On Tuesday (August 14), Wisconsin residents will vote in a primary election. The rules for primary elections differ from the general election. In a primary, you must only vote within one political party. In a general election, you can vote for the candidate of your choice, regardless of political party affiliation.  For instance, in a general election you could vote for a Republican senator and a Democratic governor, but in a primary, once you vote for one candidate in a party you must stick with that party as you fill in the rest of your ballot. You do not have to cast a vote for each open position. You can leave some blank. Wisconsin does allow same-day registration, so you can register to vote at the polls as long as you have proof of residence, like a driver’s license or a utility bill. You must be a resident of Wisconsin for at least 10 days prior to voting in a Wisconsin election. Even if you are registered, you will need a photo ID to vote. While primary elections don’t draw the same turnout as general elections, they are critical to the political process as they whittle down a pool of candidates. For instance, this year, 10 candidates are running for governor in the Democratic Party and only one will make it out of the primary. Also, in Outagamie County, where we’re located, all three candidates running for sheriff are members of the Republican Party, so the primary election will decide the overall winner. If you have any questions about how to register to vote, please let us know. We’d be glad to help.