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Slick TV ads often make financial planning and wealth management sound simple, but it’s usually not. Managing wealth requires knowing a lot about highly technical topics, like taxes, government regulations, and finance as well as history, psychology and how to communicate with loved ones about sensitive issues. This article highlights some of the knowledge needed to manage wealth and why it’s often so daunting without the help of an independent personal financial advisor who is familiar with your situation.
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Understanding The Federal Reserve Mandate To End Inflation
The Federal Reserve System, the nation’s central bank, has a dual mandate to pursue maximum employment and maintain price stability. These two priorities are currently treated equally, but that was not always the case. In fact, the Fed’s bias toward maximizing employment was a critical driver of the stagflation that plagued the U.S. in the late 1960s and 1970s. Recognizing the need to balance price stability and maximum employment, in 1977, Congress revised the Federal Reserve Act.
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Fed Governor Kugler Details Inflation And Economic Outlook
The 12-month inflation rate, as measured by the personal consumption expenditures (PCE) index, was 2.6% in December, down from its peak of 7.1% in June 2022, and the six-month rate for PCE inflation was even lower, at 2%, which is the target rate set by the Federal Reserve.
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Why Rates May Not Be Cut Until June
The cost of a loan to buy a home, car, college education, and achieve the American Dream is staying the same for now. As expected, Federal Reserve Chairman Jerome Powell said the central bank did not lower loan rates following the Fed’s Wednesday, Jan. 31, 2024, policy meeting.
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Practical Suggestions For Achieving Your 2024 Resolutions
New Year’s resolutions usually fail because they‘re often too hard to achieve. After six months, only 10% of people who make resolutions achieve them or remain committed to them, , according to a study by Dr. Mark Griffiths, a Chartered Psychologist and Distinguished Professor of Behavioral Addiction at the Nottingham Trent University. What can you do to make financial, medical, or other personal resolutions more likely to be achieved?
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A Sign Of Progress In Solving U.S. Economic Problems
The Federal Reserve appears to be pulling off a feat most experts did not believe it could: ending its aggressive inflation-fighting campaign of 11 interest rate hikes without tipping the U.S. economy into a recession.
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Fed Keeps Rates Unchanged; Expects Easing In 2024
To promote transparency and free markets, the Federal Reserve System began publishing the opinions of the 19 U.S. central bankers that decide interest rate policy.
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Have You Logged Into Your Social Security Account?
Have you logged in to your Social Security account? Creating an online account at SSA.gov is an important first step in understanding your retirement income situation. However, only about 60 million of the 160 million individuals in the U.S. labor force who have Social Security accounts have created a way to access the Social Security Administration’s website.
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The Great Fake Out Of 2023 Is Poised To Extend Into 2024
All year long, the economy and stock prices have fooled experts and consumers, outperforming expectations month after month.
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Test Your Financial Planning IQ
The five questions below are a challenge meant to allow you to assess your knowledge of investing, tax and financial planning. If you have been following our news stream, this quiz draws on familiar ground. The answers are below.
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Planning Briefs
Why Knowledge Of Financial History is Critical To Investors
Published Wednesday, August 17, 2022 at: 9:22 PM EDT
The extreme financial effects of the COVID-19 pandemic seemed unprecedented to most investors. Over the past two years, Americans witnessed a sudden stop financial crisis in March 2020, the injection of nearly $10 trillion of monetary and fiscal stimulus within a matter of months, and an unanticipated burst of inflation that caught even the Federal Reserve off guard. The truth, however, is that these events seem anomalous only because many historical parallels have disappeared from our collective memory. In fact, there are no living Americans who recall the two most relevant events — the onset of World War I in July 1914 and the post-World War I/Great Influenza inflation of 1919-1920.
Famed economist John Kenneth Galbraith once said, “for practical purposes, the financial memory should be assumed to last, at maximum 20 years.” But this principle applies only if you lack the will to self-educate on events that transpired beyond this boundary, or work with a properly schooled professional.
“Those who delve into the more distant past discover that what seems unprecedented in the moment has almost always occurred before — often multiple times,” says financial historian Mark Higgins, CFA, CFP®. “More so than prior financial crises, the COVID-19 pandemic revealed the importance of studying financial history.”
Students of the 1919–1920 inflation were unsurprised by the onset of Post-COVID-19 inflation, according to Mr. Higgins, whose forthcoming history of the U.S. financial system, “The Enlightened Investor,” (Greenleaf Book Group) is expected to arrive on Amazon in spring 2023.
“Investors who recall the policy mistakes of the Federal Reserve in the late 1960s understand why the Fed leadership today is unlikely to repeat these errors,” says Mr. Higgins. “This makes the Federal Reserve’s hawkish turn in 2022 an expected outcome rather than an aberration.”
Those who know about the speculative bubbles that have tormented U.S. markets for more than two centuries are justifiably skeptical of the unproven prospects of cryptocurrencies and NFTs. “Deep knowledge of the past enables envisioning the future with greater clarity,” Mr. Higgins, says a senior investment advisor to multi-billion-dollar institutional federally qualified pension and 401(k) plans. “Investors who immerse themselves in history will likely greet future financial events with recognition rather than surprise, enabling better outcomes.”
If you are interested in learning more about how the period from 1914 to 1921 parallels with current investment conditions and how knowledge of history affects our firm’s investment outlook, please let us know.
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