“The sky is falling! If my chosen candidate doesn’t win, the markets are doomed and so are my investments.”
In this article, Bijan Golkar points out that a presidential election can cause excitement or despair depending on if you are a Republican or a Democrat and who the major parties nominate for the highest and most powerful office in the world.
The article discusses market returns both before and after a presidential election year and some of the underlying reasons for market volatility. Then the article stresses the importance of a person’s long-term goals and a plan for long-term growth as opposed to “emotional investing.” Finally, the article discusses the pros and cons of our economy that could affect investment values.
“The presidential election is eight months away but ‘political risk’ is already being felt on Wall Street, as money and politics collide in a flurry. . .”
In this article, Adam Shell describes how the circus-like 2016 presidential race is creating uncertainty on Wall Street. This uncertainty centers on the candidates and how they promise to deal with select industries, trade, tax policy, and globalization.
For example, many of Donald Trump’s campaign speeches are protectionist in nature and some on Wall Street worry that Trump will build a wall around the United States choking off globalization and world trade.
For Wall Street, Hilary Clinton is also problematic. She has been a vocal critic of the pricing practices of the pharmaceutical industry. She is also a proponent for more regulation on the financial industry and has suggested that banks involved in speculative investments should pay a “risk fee.”
As the campaigns develops between establishment and anti-establishment candidates, it should be an interesting run up to the November elections that could impact Wall Street and investors.
Automated investment services are expanding. Many financial service companies are offering “robo advice,” in which investors complete an online questionnaire and a computer program generates and monitors a portfolio of funds. Robo-advisers are also designed to automatically rebalance a portfolio based on changes in the market as well as any changes in the amounts allocated to certain investments.
With many investors already making their own trades online, investment companies believe that robo advisors have these additional benefits:
lower costs for obtaining advice and conducting transactions.
an ability to adjust the portfolio for tax purposes by selling shares that have declined to offset gains.
an easier investment approach for younger clients with less-complicated financial lives.
Some will be concerned about automated portfolio management. Human advisors will still be available to address issues about mortgages, insurance, estate planning, retirement income, and other topics that robo-advisers are not yet equipped to answer.
For additional information on robo advice, click on the following articles:
The investment professional (or team of professionals) you decide to work with will depend largely on your investing goals and the types of products and services that can help you meet those goals. Your financial needs, and the professionals you work with, are likely to change over your lifetime. The amount of money you have to invest and your investing priorities also will likely change. What doesn’t change, though, is the best way to find help. FINRA (Financial Industry Regulatory Authority), an independent not-for-profit organization authorized by Congress to protect Americans’ investors, offers the following key steps for choosing financial professionals:
Identify your financial needs, starting with your goals.
Understand the different types of people or firms you could work with, and what each can (and cannot) offer.
Search for possible candidates.
Check the work background and disciplinary history of your finalists.
Make sure you read and understand any paperwork you’re asked to fill out or sign.
Searching for Possible Candidates
One place to start is by talking with your friends, neighbors, relatives, and colleagues—especially those who have some experience as individual investors. Here’s what to ask:
What are the names of the investment professionals you have used?
How long have you done business with those individuals?
How much or how little have you relied on their advice?
Have you ever had a problem with that professional? And, if so, how well and how quickly was the matter resolved?
How often does your investment professional contact you? Different people like to interact in different ways and on different schedules, so this question can help assess whether the relationship would work for you.
“Do you feel as if you’ll be in debt forever? You’re not alone.”
According to a CreditCards.com survey, 13 percent of Americans say they’ll never pay off all their loans, and another 8 percent say they won’t pay off what they owe until they’re 71 years old. While the results of the survey are discouraging, this Kiplinger article describes the following 10 reasons people can’t get out of debt and also provides suggestions for getting out of debt.
“Even after bouncing hard off last week’s lows, the stock market has appeared unwell.”
Based on current information from August 2015, Michael Santoli, the author of this article, explains some of the “big” problems that are affecting the stock market and the nation’s economy. He cites the following major factors that account for the current downward spiral of the U.S. financial markets.
Economic slowdown in China
More realistic expectations for future economic growth
Lower forecasts for corporate earnings growth
Uncertainty about the Federal Reserve’s decisions that could impact interest rates
The political climate leading up to the 2016 presidential election
One final point: The month of September is typically the worst month of the year for stocks. September 2015 should be an interesting month to say the least–get ready and hang on for what promises to be a rough ride.
There’s a substantial gulf between the amount of money Americans have actually saved for retirement and what they might need to last throughout their golden years.”
This article reports the results of a survey conducted by the Employee Benefits Research Institute which discovered that nearly three in five people surveyed had saved $25,000 or less for their retirement. Even worse—more than a quarter of those surveyed had saved less than $1,000.
To help plan for retirement, many financial experts suggest that you need between 70 and 85 percent of whatever yearly income you had during your career in order to sustain the lifestyle you enjoyed prior to retiring. While these calculations provide a recommended dollar amount to provide retirement income, the same calculations often create two problems. First, there is often a big gap between what people have saved and what they need for retirement. Second, the amount of money you need in retirement is based on what’s important to you and the standard of living you want in retirement. And the you may be the most important part of retirement planning.
“. . . Financial coaching initiatives that target the working poor have sprung up in communities across the country.”
For low-income wage earners, the idea of paying hundreds of dollars for professional financial help can seem about as far-fetched as buying a winning lotto ticket. And yet, help is available in a number of the nation’s larger cities including Chicago and New York. In most cases, the financial coaches volunteer their time and have a background in personal finance or have received financial and investment training. The participants receive specific suggestions geared to their individual situation that are designed to improve their credit score and help them build a sound financial future. According to Richard Cordray, the director of the Consumer Financial Protection Bureau, “Having a trusted, well-informed financial coach can increase your odds of financial success.”
For more information, click here. Note: There is a short video that accompanies this article.
You may want to use the information in this blog post and the original article to
Point out that often low wage earners don’t have the money to pay a financial coach to help them manage their finances.
Describe different situations where the advice from a financial coach could make a difference in someone’s financial future. For example, a coach’s suggestions on how to improve someone’s credit score could lead to obtaining a credit card for emergencies or a short-term loan to bridge the gap between unemployment and employment.
Assume you are unemployed and have exhausted your emergency fund. You are behind on monthly payments including your rent and utilities. What steps can you take to improve your financial situation?
In the above situation, what suggestions do you think a financial coach could provide that would help you work through this difficult situation?
“So put aside that beach read for a few minutes and take this quiz to assess your financial SPF factor.”
While most people recognize SPF as standing for sunscreen, SPF–as defined in this article stands for Save, Protect, and Fund. After a brief explanation of each SPF financial term, the article asks 11 questions that someone can use to help gauge their financial knowledge and financial planning skills.
At the end of the quiz, you are also told how your answers stack up and then the article provides suggestions about how to improve not only your score, but also your ability to plan for your financial future and retirement.
You may want to use the information in this blog post and the original article to
Stress the importance of effective financial planning over your lifetime.
Begin a discussion about the benefits of long-term investments.
Review time value of money calculations.
How can financial planning help you obtain your goals and objectives?
Why should you begin investing sooner rather than later?
A common problem for some people is they don’t have the money they need to begin an investment program. Given your current circumstances, what steps can you take to “find” the money to start an investment program?