Do your investments match your values?
On Monday February 24th 2020 the Dow dropped over 1000 points in a single day.
Human behavior is driven two forces, fight or flight. When facing a dramatic event we as individuals are forced to REACT to what happens.
When looking at the market, if a person is underinvested and it goes up day after day making new highs, that person may experience FOMO… fear of missing out. They might make the decision to invest based on emotion instead of fundamentals.
Several recent studies show peoples number one fear is running out of money during retirement.
To prepare us for retirement the government gives workers the ability to set up qualified accounts in order to save for retirement and get tax deferred growth. By deferring taxes money saved can grow faster. You put money away, not paying taxes now, but paying taxes on the money when you pull it out during retirement.
When you get to retirement, you can start pulling money from your account. In the past it has been considered good practice to not draw more than 4% from an account during retirement in order to make sure you don’t outlive your money. In the past bond yields have been 5-7% and that makes a 4% draw down possible. Now over the past 5 years bond yields have been around 2-3% and because many retirees rely on bonds to deliver income to their portfolio, many economists and advisors have been advising clients to withdraw less from their IRAs; this is so retirees don’t run out of money when they are older.
Now what if I told you there was a government program that requires you to draw more income from your account, without any consideration for how long you or your spouse will live, and without regard for whether you will run out of money or not.
Continue reading “RMD: What are the Risks and How Can We Address Them?”
In recent months companies at the center of the Opioid Crisis have been fighting in court about the roles they played in the epidemic that has affected millions of Americans. The over prescription of highly addictive drugs has had severe impacts on families, businesses, and the economy as a whole. (1) But the Opioid Crisis is only part of a much larger problem facing American Society.
In March of 2017 a landmark study was released connecting opioid abuse, financial security and death rates in the United States. The information is sobering and should be the focus of policy changes at all levels of government.
Continue reading “Deaths of Despair”
In 2018, the government of Iceland passed a law making it illegal to pay women less than men. (1)
According to a World Economic Forum report, “At the current pace, gender gaps can potentially be closed in 54 years in Western Europe… and in 151 years in North America (reflecting lack of progress in the region this year).” (2)
A recent study by Economic Policy Institute found that women earn 74 cents for every $1 earned by a man with similar education and experience. This wage gap has always existed and is disturbing in a society founded upon equality and justice. (3)
This wage gap has important implications for women and their financial security, especially during retirement.
Continue reading “Women and Financial Security”
A recent study by McKinsey Global Institute examined how robotics will affect labor and the economy. The study estimated that 800 million jobs (1/5 of all jobs) will be impacted by advances in robotics. (1)
Among the jobs most impacted include brokers, accountants, office staff, machine operators, and food service. Lower skilled, repetitive tasks are most likely to be replaced.
What does this mean for family finances in the years to come?
Continue reading “Jobs at Risk”
Each day we read reports that the economy is booming.
“U.S. housing and consumer are strong” (1)
“Factory output is poised to speed up.”
“Stronger global growth expectations and a weaker dollar should help.”
“The stock market hits record highs…”
With that being the case, you might find it surprising that several large corporations have recently announced they will be laying off large numbers of employees, especially managers.
Continue reading “How to Deal with Being Laid Off: 5 Strategies To Prepare For Job Change”
When I first read “The Work of Nations” by Robert Reich in the mid-1990s I had almost no background in macroeconomics. (1) But in reading it, Reich was able to effectively describe how radically the economic system was changing as a result of Globalization. Reich at the time was Bill Clinton’s Secretary of Labor and a key member of his economic team.
As context, China’s economy in 1991 was $400 billion compared to $6,174 billion for the US. China entered the global trade organizations in 1992. Today China’s economy is $14 trillion compared to $21 trillion for the US.
Continue reading “The Work of Nations: 30 Years On…”
Many people are paralyzed into inaction when they start thinking about the challenge of planning for retirement. The truth is there are a few first steps anyone can take on their own to improve their chances for success.
A first step is to determine how much income you can expect to receive from social security. In years past SSA would mail annual statements for people to see their expected benefits. Things have changed… go to google and search for “my social security”. You will create an account and through this account be able to determine your numbers.
Continue reading “First Steps to Retirement Planning”
I have recently had several people ask me about SRI. What is it? Why does it matter?
The first thing to understand is SRI means different things to different people. Several years ago I attended a gathering of advisors focused on sustainability at the Bloomberg headquarters in NYC. I talked to many of the 300 attendees and what I found was every single person had a different interpretation of what SRI meant.
Some focused on promoting clean energy, some focused on workers issues and inequality, some focused on climate change, some look to exclude alcohol and tobacco, others focused on micro lending. Each focus is unique and approaches the challenge of investing with different assumptions.
Continue reading “What is Socially Responsible Investing?”
Several years ago, Bloomberg Businessweek did a bio pic on Hank Paulson, Bush’s Treasury secretary who served during the Financial Crisis of 2008. After reviewing the events that led to the Crisis, connecting the dots, and seeing the impact of what happened, Paulson had this to say at the end of the film…
“The whole reason I’m doing this, is not because I want to look back, but because I have increasingly come to the view that it’s important that there be a historical record for those that come after me, so we don’t replay this movie all over again.” (1)
Fast-forward to November 2019, and we see many positive and negative conditions developing that raise questions about the longevity of the 10-year bull market in stocks and the health of the US economy.
Continue reading “Mixed Economic Signals, Debt Issues and Fossil Fuel Companies”