The Personal Financial Satisfaction Index (PFSi), reported by the AICPA (American Institute of Certified Public Accountants) is at an all-time high. This quarterly economic indicator measures the financial situation of average Americans. PFSI is the difference between (1) the Personal Financial Pleasure Index, measuring the growth of assets and opportunities, and (2) the Personal Financial Pain Index, which is based on lost assets and opportunities. The most recent report had a Pleasure Index 68.1 in contrast to a Pain Index of 42.1, resulting in a positive reading of 25.9, the highest since 1994.
While the stock market is high, unemployment is declining, and inflation is low, remember the economy is cyclical. Be sure to consider and plan for your long-term goals. Stay aware and position your financial plan appropriately to safeguard finances when the economy is in a downturn. Also, analyze your cash flow to an attempt to increase savings, including an appropriate emergency fund.
For additional information on financial satisfaction, click here.
Have students create an action plan for situations that might be encountered in times of economic difficulty.
Have students create a team presentation with suggestions to take when faced with economic difficulties.
What are examples of opportunities that create increased personal financial satisfaction?
Describe actions a person might take when faced with economic difficulties.
“The Dow’s ongoing flirtation with the 20,000 market milestone is the talk of Wall Street.”
The 120-year-old Dow Jones Industrial Average consists of 30-blue chip stocks that make up arguably the world’s best-known stock index. At the time of this article and this blog post, the average is trading at near record levels and threatening the break the 20,000 mark. So how important is breaking the 20,000 barrier? Consider the following five questions.
Why, with the Dow so Close to 20,000, can’t it get over the hump?
Is Dow 20,000 a big deal?
Does a new milestone mark a new stage of the bull run we’ve seen?
Will Dow 20,000 improve the mood of investors?
Is Dow 20,000 a reason to buy?
Adam Shell, in this USA Today article, provides some answers to the above 5 questions that can help investors keep a more balanced perspective on what a Dow 20,000 really means for both individual investors and the economy.
You may want to use the information in this blog post and the original article to
With so much in the news about the stock market, record high values, a possible correction or pullback in market values, the Federal Reserve’s interest rate changes, and other economic factors, you may want to use this article and this blog post to explain why the Dow Jones Industrial Average is just one of many factors that affect investors, the market, and the economy.
Since the Dow Jones Industrial Average is in record territory, is this a good time to invest in the stock market? Explain your answer.
At the time you answer this question, what is the current Dow Jones Industrial Average? Has it gone up or down in the last six months, and what affect has the change had on the stock market and the economy?
“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.
SBLOCs are loans that are often marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the assets in your investment portfolio without having to liquidate these securities. They do, however, carry a number of risks, among them potential unintended tax consequences and the possibility that you may, in fact have to sell your holdings, which could have a significant impact on your long-term investment goals.
Set up as a revolving line of credit, an SBLOC allows you to borrow money using securities held in your investment accounts as collateral. You can continue to trade and buy and sell securities in your pledged accounts. An SBLOC requires you to make monthly interest-only payments, and the loan remains outstanding until you repay it. You can repay some (or all) of the outstanding principal at any time, then borrow again later. Some investors like the flexibility of an SBLOC as compared to a term loan, which has a stated maturity date and a fixed repayment schedule. In some ways, SBLOC are reminiscent of home equity lines of credit, except of course that, among other things, they involve the use of your securities rather than your home as collateral.
The Financial Industry Regulatory Authority (FINRA) and the SEC’s Office of Investor Education and Advocacy (OIEA) have issued an investor alert to provide information about the basics of SBLOC, how they may be marketed to you, and what risks you should consider before posting your investment portfolio as collateral. SBLOCs may seem like an attractive way to access extra capital when markets are producing positive returns, but market volatility can magnify you potential losses, placing your financial future at greater risks.
“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.
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.
“It’s easy to figure out the right type of account—just start with what you’re saving for.”
Too often, investors want to invest, but they don’t know where to start. While most investment companies and brokerage firms make it as easy as possible to open an account and begin investing, for many would-be investors opening an account is confusing and often traumatic.
The link below describes a practical approach that helps would-be investors to begin investing at Vanguard—one of the largest and most successful companies in the investment world. Note: The link below provides information for Vanguard, but other investment companies and brokerage firms provide similar information on their websites. At the Vanguard site, there is basic information about mutual funds. Then specific information about fees and no-load funds is included in the section “Discover Vanguard’s Advantages.” Next, there is a section on choosing the right fund. Then, information about different types of investment accounts is provided. Finally, there is a 3-step process that can be used to open an account.
“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?
On May 28, 2015, the Securities and Exchange Commission announced fraud charges against William Quigley. He is accused of creating a scheme to steal from investors and from a brokerage firm where he worked as the director of compliance.
The SEC’s Enforcement Division alleges that was involved in a scheme to solicit investors to buy stock in well-known companies or supposed start-ups on the verge of going public. The SEC alleges that:
The securities were never purchased for the investors.
Quigley wired the money out of the country or he withdrew it from ATM’s near his home.
he had accomplices, two brothers who live in the Philippines.
My Wife and I Never Discussed Money Before Getting Married–and Ended Up with $52,000 of Debt
Prior to tallying up our debt, we’d talked about traveling internationally, starting a family, and, some day retiring comfortably. There was so much we wanted out of life, but . . .”
This is an excellent article that describes what can happen when a soon-to-be-married couple doesn’t talk about finances. Fortunately, the two people in this article–Deacon and Kim Hayes–realized they had a problem and then took steps to get their finances back on track.
Specific steps this couple took can make a big difference over time. Among the suggestions included in this article are:
Writing down all your assets, debts, income, and expenses.
Prepare a budget and review each item for opportunities to save money.
Replacing a newer, expensive car with an older car.
Selling unwanted or unneeded items online.
Using any extra money to repay debt.
Establishing an emergency fund.
Saving and investing a specific amount each month.
Consider This: Deacon Hayes–the author of this article–became a financial planner and now shares his story with his clients.