In early August, the headlines were inundated with the news the Peoples Bank of China (PBOC) had decided to devalue their currency in relationship to the U.S. Dollar. Not only did they devalue their currency, but they actually devalued it against our dollar three times in the same week. This was the largest currency devaluation by China in over 20 years. Our markets in the States were quite rattled by the news, as it seemed to come from left field. The Dow Jones Industrial average* dropped 277 points the day after the announcement only to rally to close the day near the flat line. The U.S. Dollar also had a few very volatile days as it traded from .975 against the world basket of traded currencies to .960 a day later (roughly a 1.5% drop in the U.S. dollar in one day). There is much speculation regarding the reasons why China decided to take these drastic steps to weaken their currency, but looking deeper, it is most likely a combination of factors that persuaded the PBOC to make these moves.
You may have noticed recent financial headlines regarding the European Union and the inability of the country of Greece to repay their debt. Our clients continue to question, “Why does it matter to us in the U.S. if Greece defaults on their loans?” Greece has a Gross Domestic Product (GDP) of $237 Billion,* which is only half of the GDP of our Great State of Michigan at $449 billion as of 2014.** “Why should my investment strategy be impacted by such a small country? Greece has many great achievements in the history of the world, but why is it such a significant part of the current economy?”
Per Investopedia, a consolidation is defined as “the movement of an asset’s price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years.”*
A properly diversified portfolio will normally contain some amount of bond, or bond fund exposure. Bonds are contracts between an entity, i.e. company, municipality, or government and an investor that lends money to that entity. The entity agrees to pay the investor interest over an agreed upon time period and at the end of that period, the entity agrees to repay the investor’s principal in full (as long as the entity is solvent and able to do so).
The bees’ll buzz. Kids’ll blow dandelion fuzz … and people will look to buy a new house in Suummmmerrrrr! I live in Michigan and my daughters have made me watch “Frozen” over ten times, so I thought a quote from Olaf’s song was appropriate. It’s that time again – when people give in to their itch to put the house up for sale and upgrade their castles!
In a written letter, Benjamin Franklin quipped, “In this world nothing can be said to be certain, except death and taxes.” Surprise! Tax time has rolled around again.
First of all, the government gives us a small window of time from January 1 through April 15 during which we can actually make contributions in the current calendar year for last year. So if you forgot to make your 2014 full contribution, it’s not too late to get it in. Actually, you could even contribute after April 15 if you file an extension on your taxes, but that’s getting into it more deeply than I’d like to at this point.
When saving for retirement, clients often ask about the difference between a 401(k) plan and a Roth IRA. Here is a quick outline about the potential drawbacks and benefits of each:
I’ve been known to make resolutions regarding my health, exercise and financial goals. Despite my best intentions, the business of life, temptations of past eating habits, or the after-Christmas sales at the stores have derailed my plan for success. I’ve come to realize that I’m not the only one with a problem, and it’s made me realize the two major culprits contributing to our collective downfall.
It’s that time again: Thanksgiving is just around the corner with Christmas right on its heels. Like hardworking squirrels storing away nuts for the future, I find handling Christmas expenditures is best if planned for in advance and not looked at as an unexpected expense; after all, it comes every year.
My daughters and I recently played the board game Life® and faced the proverbial question: college or no college? My children are in fifth and third grades this year, and I was startled to realize that this generation heads off to college in eight short years! As a financial advisor, I wondered, how many parents have started planning for these future costs?
