Monday, March 29, opened with two banks reporting they face losses due to the default of a small U.S. hedge fund. That news, combined with rising yields, higher new cases of COVID-19, and a public warning of new virus variants, started the week off on an unsettled note.1
Despite the shaky start, upbeat economic reports helped spark a rally that was paced by gains in the technology sector. The market also reacted positively on Wednesday, March 31, to the introduction of a $1.9 trillion infrastructure proposal.
Stocks closed out the week on April 1 with an exclamation mark, with the S&P 500 Index closing above 4,000 for the first time.2
Last week’s trading opened on news that a U.S.-based investor was forced to unwind positions in multiple Chinese technology companies and American media holdings.
A number of large banks saw their share prices fall early in the week, reflecting concerns about their exposure to the hedge fund losses. Meanwhile, investors grappled with whether this was a one-off event or the opening act for additional hedge fund issues. As the week wore on, it appeared the hedge-fund issues were an isolated event.1
Inflation has emerged as one of the top financial concerns for investors as they size up the economy for the rest of the year.
According to research by Deutsche Bank, Google searches for “inflation” are rising rapidly and recently hit a peak not seen since the tracking began 13 years ago.3
Fed Chair Jerome Powell has said that inflation is likely to pick up as the economy recovers from the pandemic, but he believes it will be temporary. Powell has also stated that the central bank plans to keep short-term rates anchored near zero through 2023.4
“Inflation is caused by too much money chasing after too few goods,” according to Milton Friedman, the well-known American economist who won the 1976 Nobel Memorial Prize in Economic Sciences.5
How much money is too much money? Remember that lawmakers have enacted six major stimulus bills, totaling about $5.3 trillion to help manage the economic burden on families and businesses during the pandemic.6
One piece of wisdom to keep in mind is that the stock market is a discounting mechanism, meaning it considers all available present and potential future events to determine its closing price. When there’s uncertainty about the economy, the stock market may be more volatile while it searches for answers.7
Historically following peaks in money market holdings, we've seen very positive stock performance.
It certainly makes sense that there’s dollars on the sidelines considering the fact that folks probably haven’t spent like they normally would if they weren’t in lockdown and quarantine, and you’re seeing money market account assets at $4.3T at the end of the January. It’s been at this level for the last handful of months.
We peaked back in May of 2020 at $4.8T, so we’ve come down slightly, but really hung in there around $4.3T. This appears to be a positive backdrop for stocks given all of the dollars on the sidelines and no real returns in cash at the moment, the money should find its way into the stock market.
Many investors are looking to build a portfolio that reflects their socially responsible values, while giving them the potential for solid returns. That’s where SRI Investing, Impact Investing, and ESG Investing may play a role.
In the past, some investors regarded these investment strategies as too restrictive. But over time, improved evaluative data and competitive returns made these strategies more mainstream. Even though SRI, ESG investing, and Impact Investing share many similarities, they differ in some fundamental ways. Read on to learn more.8
ESG Investing stands for environmental, social, and governance investing. The model assesses investments based on specific criteria, such as ethical business practices, environmental conservation, and local community impact. The underlying belief is that good corporate practices may lead to better long-term corporate performance.
The popularity of ESG investing has grown: in the United States alone, there are more than 350 ESG mutual funds and exchange-traded funds (ETFs) available. Just a decade ago, there were only 100 ESG funds.9,10,11,12
SRI uses criteria from ESG investing to actively eliminate or select investments according to ethical guidelines. SRI investors may use ESG factors to apply negative or positive screens when choosing how to build their portfolio. For example, an investor may wish to allocate a portion of their portfolio to companies that contribute to charitable causes. More than $17 trillion is managed under sustainable and responsible investing principles.11,12,13
Also known as thematic investing, impact investing differs from the two above. The main goal of impact investing is to secure a positive outcome regardless of profit. For example, an impact investor may use ESG criteria to find and invest in a company dedicated to the development of a cure for cancer no matter the outcome of that investment.12,13
The biggest takeaway? There are plenty of choices to keep your investments aligned with your personal beliefs. Let us know if you’d like to discuss investing with your values.
With all of the beverage options available, sometimes water can seem just BLAH! However, water is an essential nutrient because it is necessary for all of the biochemical reactions that take place in our bodies. Water is required for digestion, absorption, transportation, dissolving nutrients, elimination of waste products and thermoregulation.14 There are so many fun and healthy ways to make your water taste better to encourage yourself to drink more. Listed below are some easy options to spice up your everyday water consumption:
It is commonly recommended to drink at least half of your body weight in ounces of water a day. This practice is worth it for your overall health, energy levels, and waistline by increasing your metabolism.
What are some of your favorite ways to make water more exciting? Email firstname.lastname@example.org with your water drinking tips which we will anonymously compile and share in the next newsletter just in time for summer hydration!15
Dollar-cost averaging is breaking up a sum of money into the same amounts and consistently investing them over time. Lump-sum investing is the immediate investment into a security using all available funds. So which approach is best, or is there something entirely different to consider?16,17,18,19
Over the past year, we have faced stock market volatility, economic impact from COVID-19, tax changes, and stimulus checks, just to name a few. With the financial world rapidly evolving, financial literacy is becoming more important than ever. Here are some common tips that may help improve your finances, no matter where you are in life. We've also thrown in a couple of quizzes to test your knowledge - let's see how you do!
The foundation of any financial plan is a solid emergency fund with at least 3 to 6 months' worth of expenses saved. However, sometimes this is easier said than done. In a recent article, roughly half of Americans say they live paycheck to paycheck and have no formal savings plan.
However, once you've started saving, where is the best place to keep the money? We often look at online, high-yield savings accounts as the best place to store your cash. As a reminder, we generally do not recommend investing any funds you'll need within the next several months.
Once we have an emergency fund established, we need to start creating some financial goals. While "I want to have lots of money" may sound like a great goal, it's just too vague. How much is "lots?" If you don’t know … how will you know when you have it? And will the "lots" of today be enough for tomorrow?
In developing your financial goals, make sure they’re S.M.A.R.T. …
If you haven't already taken some time to clearly define your financial goals, don't put it off any longer. Well-defined goals are imperative for creating an effective financial strategy. Do they balance spending and saving?
Once you've created your "SMART" financial goals, you'll want to start investing to put your money to work. Generally, many experts recommend you target a 15% to 20% savings rate to help keep you on track.
What do you do with the 15% to 20%? Well, that will depend on your situation. However, a typical place to start is using your employer's retirement plan, like a 401(k), to take advantage of any match.
There are a variety of accounts to pick from and investment strategies to choose. This is where having a trusted financial advisor can come in handy.
You have your emergency fund, created your long-term goals, and have begun saving for them. The next financial move to consider is protecting your assets - for yourself and for future generations. Depending on where you are at in life, having certain insurance coverage in place can help provide some peace of mind and protection for you and your loved ones.
Once you have proper insurance in place, having an estate plan is the next step to take. We recommend working with an estate planning attorney to draft your documents. This could include a will, health care directive, durable power of attorney, and in some instances, a trust. Once you've completed your estate plan, having your estate planning documents reviewed every five years or after any major life change is an often overlooked area of financial well-being.
It is now commonly accepted that the correlation between the practice of gratitude and happiness is no longer a theory or cute idea. Countless double-blind, placebo-controlled studies have been conducted proving this theory and the scientific proof connecting gratitude and happiness is now accepted among social scientists.
Gratitude changes everything! It actually creates positive emotions that can reverse the impact negative emotions have on us. It can change the perspective on a conversation or the outlook of your day.
There are many ways to express gratitude, and you may also want to get the whole family involved. We’ve included three great ideas to encourage your practice of gratitude below:
Red: Name a person you are grateful for
Orange: Name a place you are grateful for
Green: Name a food you are grateful for
Blue: Name a thing/object you are grateful for
Purple: Anything of your choice
Gratitude is one of our company’s core values because we believe so strongly that it can change one’s experience of life. We want to help cultivate that and encourage you to live your best life.
Let us know if you give one of these tips a try!
1. Fortune.com, March 29, 20212. CNBC, April 1, 20213. Yahoo.com, March 17, 20214. CNBC, March 17, 20215. American Enterprise Institute, 20216. PGPG.org, March 15, 20217. Investopedia.com, 20218. Vanguard.com, June 14, 20199. Investing in mutual funds is subject to risk and potential loss of principal. There is no assurance or certainty that any investment or strategy will be successful in meeting its objectives. Investors should consider the investment objectives, risks, charges, and expenses of the fund carefully before investing. The prospectus contains this and other information about the funds. Contact the fund company directly or your financial professional to obtain a prospectus, which should be read carefully before investing or sending money.10. Exchange-Traded Funds (ETFs) are subject to market and the risks of their underlying securities. Some ETFs may involve international risks, which include differences in financial reporting standards, currency exchange rates, political risk unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility. ETFs that focus on a small universe of securities may be subject to more market volatility as well as the specific risks that accompany the sector, region, or group. An ETF’s trading price may be at a premium or discount to the net asset value of the underlying securities.11. Morningstar.com, April 20, 202012. The Forum for Sustainable and Responsible Investment, 202013. Asset allocation is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss.14. Kleiner SM. Water: An essential but overlooked nutrient. J Amer Diet Assoc 1999;99:200-6.815. Batonrougeclinic.com, August 28, 201916. Brennan, M., Li, F., & Torous, W. 2005. "Dollar-Cost Averaging". 17. Review of Finance (509-535). Maggiulli, N. February 25, 2020. "Dollar-Cost Averaging vs. Lump Sum: The Definitive Guide". 18. Retrieved from: Of Dollars and Data website: https://ofdollarsanddata.com/dollar-c... 19. Panyagometh, K., & Zhu, K. X. 2016. "Dollar-Cost Averaging, Asset Allocation, and Lump-Sum Investing". The Journal of Wealth Management (75-89).
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
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International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
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