Thursday, May 25, 2017

Federal Reserve Board's 4th Annual Survey of Household Economics and Decisionmaking

Report on the Economic Well-Being of U.S. Households in 2016, this survey and report were prepared by the Consumer and Community Development Research Section of the Federal Reserve Board’s Division of Consumer and Community Affairs (DCCA).

In order to monitor the economic status of American consumers, the Federal Reserve Board conducted the fourth annual Survey of Household Economics and Decisionmaking in October 2016. This survey provides insights into the well-being of U.S. households and consumers, and provides important information about how individuals and their families are faring in the economy. Topics examined in the survey include individuals’ overall financial well- being, employment experiences, income and savings behaviors, economic preparedness, access to banking and credit, housing and living arrangement deci- sions, education and human capital, student loans, and retirement planning.

Thursday, May 18, 2017

Retirement Data: Fidelity Plan Balances Q1 2017 and Who Contributes to IRAs?

Fidelity has updated their data on balances in retirement accounts. Balances hit another record at the end of the first quarter of 2017. They highlight some interesting data on the overlap of HSA's (Health Savings Accounts) and retirement plan contributions. Please read the press release to learn more about their conclusions from the latest update.

 Source: Fidelity Retirement Savings Analysis

In April 2017, Anqi Chen and Alicia H. Munnell at Boston Center for Retirement Research published a report titled: Who Contributes to Individual Retirement Accounts? They conclude:

Examine Your Entire Financial Life

Many investors do well at pieces of their overall financial plan, however the value of a qualified planner is they help individuals evaluate their entire financial life. Here are two resources that may help broaden the scope of what you consider when planning your financial life:

Saturday, May 6, 2017

27th Annual Retirement Confidence Survey - Employee Benefits Research Institute

"The 27th wave of the Retirement Confidence Survey (RCS), the longest-running survey of its kind in the nation, finds that the share of American workers who are very confident in their ability to afford a comfortable retirement remains low, and some workers report that preparing for retirement is emotionally or mentally stressful. However, among retirees, confidence in their ability to afford a comfortable retirement continues to be comparably high." Quoted from brief by Lisa Greenwald, Greenwald & Associates; and Craig Copeland, Ph.D., and Jack VanDerhei, Ph.D., Employee Benefit Research Institute.

Thursday, May 4, 2017

May 2017 Market Update

The Standard & Poor's 500 gained 0.91% in April. This was the strongest April since 2013 when the S&P 500 returned 1.81%. Let's start this monthly update with a bit of a history lesson. The Dow Jones Industrial Average was created in 1896. This was a price weighted index created to help followers of the market see a quick number to determine how the market was performing. Approximately sixty years after the Dow Jones Industrial Average, in 1957, a better barometer of the market was born: the market cap weighted S&P 500 index (which expanded on the S&P Composite Index). However, the first index fund still took almost twenty years from the birth of the S&P 500 index. The Vanguard index fund, VFINX, started in 1976. On the 40th anniversary for the Vanguard index fund, Bloomberg reported on it's rocky start with only $11.3 million of assets. Over the last 40 years index funds, modern portfolio theory (MPT), and the addition of ETFs, exchange traded funds, have transformed investing. Now that our history lesson is over, let's review price, sentiment, and valuation as we start May.

Thursday, April 13, 2017

Improving Our Retirement Ecosystem in the United States

In the United States federal and state regulators allow every major financial product to be offered in the marketplace. When students graduated from college prior to 1980 few of them could have conceived of the financial world they would be entering. As the retirement product offerings evolved, so did our understanding of the gaps in our system. I recently read the BPC's Commission on Retirement Security and Personal Savings report titled Securing Our Financial Future. The report states:
Workers have found themselves part of a great experiment—one that has given individuals and families far more control and responsibility for financing their own retirement, and simultaneously exposed them to greater risk. Some families are preparing appropriately, but others struggle to save for retirement while meeting competing, and often more-immediate, personal needs related to emergencies, homeownership, and education.

The commission highlights 6 areas where the US retirement system needs to improve:

Source: BPC Securing Our Financial Future

This report presents a comprehensive package of bipartisan proposals to address six key challenges:

1) Many Americans’ inability to access workplace retirement savings plans.
2) Insufficient personal savings for short-term needs, which too often leads individuals to raid their retirement savings.
3) Risk of outliving retirement savings.
4) Failure to build and use home equity to support retirement security.
5) Lack of basic knowledge about personal finance.
6) Problems with Social Security, including unsustainable finances, an outdated program structure and failure to provide adequate benefits for some retirees.

Please read the full report to learn the commission's suggestions for how to improve these areas of the retirement ecosystem in the United States. While we may not fully agree with all of the commissions' suggestions, we can all agree the current retirement ecosystem has significant gaps for many Americans that need to be addressed.

Wednesday, April 12, 2017

April Mid Month Sentiment Update

Sentiment on the market changed from positive for the short term (2 to 6 weeks) on April 8th to negative. We expect this sentiment indicator to fluctuate frequently as it measures the cumulative impact of multiple short term technical indicators on the S&P 500 ETF IVV. Intermediate patterns --covering 6 weeks to 9 months-- continue to read negative. Long term indicators 9 months to 2 years remain neutral. Additionally, the CNN Money Fear and Greed Index is moving closer to extreme fear, which might be a positive for long term investors. Using the calendar as a guide the market is overdue for a 5-10% correction. Fundamentally, earnings for the first quarter will ultimately drive performance over the coming months. I expect more volatility in the market over the coming months as the Trump legislative agenda flickers back and forth between perceived positive and negative impact on stocks. Wise investing my friends.
Please consult a qualified financial advisor before making any investment decisions. This blog is for educational purposes only and does NOT constitute individual investment advice.