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Inflation Rises… Sort of…

May 17, 2016 by Finance Gourmet

Today’s version of Let’s Overreact to Economic Statistics comes in the form of news articles noting the “biggest rise in inflation in three years!” The April inflation number, released today, serves up a 0.4% seasonally adjusted increase. This is the biggest inflation number since February 2013. So, does that mean the Fed will race to raise interest rates? Inflation and The Fed Believe it, or not, not all inflation is bad. In fact, some inflation is necessary for a healthy economy. The current Fed repeatedly has stated that it targets inflation at an annual rate of 2.0%. Even with the 0.4 percent increase for April, the 12 month inflation rate is just 1.1 percent. So, inflation isn’t exactly roaring ahead, and the Fed is unlikely to make a snap move in reaction. However, what doesn’t really get enough attention is that the 2.0% target number isn’t really a “close enough” sort of target for most economists and people at the Fed. A number of 2.1% is likely to make people nervous. That’s because while a 2 percent annual inflation is a sign of a healthy economy, anything approaching a 3 percent annual inflation triggers worries about an overheating economy, and …

Keep the Change Automatic Savings Program Review

May 13, 2016 by Finance Gourmet

As a former Certified Financial Planner, I can tell you that from a financial advisor standpoint, nothing is better than automatic. Automatic savings, automatic investing, automatic 401k, automatic bill pay, are all great ways to improve your personal finances. It seems like the financial industry agrees. One such automatic savings program comes from Bank of America and is called Keep the Change Savings Program. It works similarly to the Acorns automatic savings and investing app, but with a few small differences. Automatic Savings By Rounding Up Purchases There are a lot of ways to save automatically, including just setting up an automatic transfer to a savings account. However, some people are reluctant to commit to doing so. Ironically, these same people might sometimes be willing to save an equivalent amount of money if it can somehow be seen to be painless. The psychology of money is a powerful thing. Enter Keep the Change from Bank of America. Instead of setting up a specific amount to save each money, the Keep the Change program lets you by rounding up your purchases made on the debit card and then transferring the money to your savings account automatically. So, if you buy lunch …

Which Is Better HSA or FSA?

May 11, 2016 by Finance Gourmet

Which is better a flexible spending account or a health savings account? The answer to which is better between a health savings account or flexible spending account depends, unfortunately, on the specifics in which they are setup. However, it is relatively simple to determine which is better an FSA or an HSA. First, you’ll want to understand what an FSA vs an HSA looks like. When FSA Is Better Than HSA An flexible spending account, or FSA has many advantages over paying for medical expenses out of your own pocket. However, it has only one real advantage over a health savings account, or HSA. The only eligibility requirement for having and using an FSA is that your employer offers one. It doesn’t matter what kind of health insurance plan you choose, or whether that plan has a high deductible. In order to have an HSA, you must have a qualifying high-deductible health insurance plan. The reality is that the deductibles aren’t necessarily that high, and in fact, may be close to the deductibles on other health plans. But, if you don’t qualify for an HSA, then a FSA is better than an HSA. The only other advantage of an FSA …

Apple Stock and Changing Times

May 2, 2016 by Finance Gourmet

Apple Stock has gotten a bit of a beat down lately after finally experiencing what everyone knew would have to happen someday. It seems that Apple has finally saturated every market on earth, and there will be no matter automatic increases in number of devices sold in ever category. Of particular concern to most investors is the drop in iPhone sales. It turns out there are two major issues. First, is that in China, iPhones are no longer the must have item they once were. The other is the maturation of markets. Apple No New Products When you make a brand new product, or in Apple’s case, when you create a new product category, you get a sales trajectory that includes people buying it because it is new and different, and surely there is something that you can do with it. Of course, over time, this free pass sort of evaporates as people learn what they can and can’t do, and whether or not those things matter to them. Recently, Apple enjoyed great success with the iPhone 6, in large part because Apple finally offered a big phone. Naturally, Apple users ran out and bought the bigger phone. However, …

Fed Leaves Interest Rates Alone for April

April 27, 2016 by Finance Gourmet

The Federal Reserve announced that it would not raise interest rates in April. This was not a surprise to anyone. That keeps interest rates at a range of 0.25% to 0.5% which is where it was set last December during the first interest rate increase in years. The Fed statement that accompanied the announcement did not provide any leaning for the upcoming June meeting. The modern Fed likes to telegraph its moves whenever possible, so it is a reasonable assumption, that either a) The Fed is right on the border about an increase in rates for its June meeting, b) The Fed is not planning on raising rates for the June meeting, but wants a neutral tone, so that if it wants to raise rates the next time around, a small change in the wording would telegraph that possibility. Chances are better for B than A barring any big economic news or stock market moves. The Fed did change the way it talked about the global economy, which is basically a way of saying that they aren’t still worried about China ruining everything like some people were at the beginning of the year. The final piece of the puzzle is that …

April Market Update

April 25, 2016 by Finance Gourmet

Well, after a mostly sunny looking April, last week and this week look like speed bumps ahead. The trick is the interlacing of several economic events pulling on the markets. First, oil prices are still causing havoc after a meeting of OPEC oil producers produced no plan or reduction in oil supply. That’s bad news for producers in the U.S. that increasingly depend on more expensive extraction techniques such as fracking to produce oil. Of course, the add-on difficulty spreads to other companies that provide equipment or assistance to oil production businesses, as well as the potential problem for banks financing such oil related companies. Second up are company’s reporting earnings, most of them coming in below expectations, or with warnings of expected future declines in business trends. Third, is potential action from the Fed, and other central banks around the world. The trick is navigating the concept that being “hawkish” on inflation is better, and the fact the the economy may be teetering on a point between growth and decline. In other words, no matter what the Federal Reserve ends up doing after their meeting Wednesday, someone isn’t going to like it. If they make it clear that economic …

When To Throw Away Taxes

April 22, 2016 by Finance Gourmet

Congratulations on filing your taxes. I hope they were too bad this year. Now, it is time to shred some taxes and their associated documents. Tax Shredding Time How long do you have to keep your taxes? Well, it’s the IRS, so the answer is of course, complicated and convoluted. However, for the most part, the answer is three years. But, before you fire up that shredder, and destroy your tax records, let’s look at the exceptions. I’ll tell you when you can just skip a section so it doesn’t get too tricky. Skip this section if you have never filed or paid late: If you paid the tax late, you may have to keep your tax documents longer. The rule is that you must keep your taxes for two years from the date your paid the tax or filed your return, but no less than three years. In other words, you can shred your 2012 and earlier taxes during 2016 (you just filed and paid your 2015 taxes), but only if you actually filed and paid your 2012 taxes in 2012. If you were late, you have to keep them for two years after you paid them. If you pay …

Stock Market Back Up Over 18,000

April 19, 2016 by Finance Gourmet

I spend a lot of time telling people not to read too much into the short-term moves of the stock market, no matter how compelling the narrative is at the time. In the past 12 months, there have been two pretty significant meltdowns attributable mainly to investors worried about China or Europe, or whatever. I plan to develop a system that takes a screenshot each day of Marketwatch and CNN Money, or others just so that you can scroll through the comings and goings of each day. I can clearly remember numerous articles as the markets were falling in January and February about how this was only the beginning of a massive collapse, and others like that. Now, just a few months later, the same website is publishing articles about the market being back up above 18,000 for the first time since July last year. The point I’m making is that with the value of a little hindsight, or just a longer term view, it is clear that a lot of the recent volatility is a result of a market that went too high, too fast, for too long without any sort of correction. A couple of correcting down blips …

Torquent per conubia nostra

April 15, 2016 by Finance Gourmet

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Praesent libro se cursus ante

April 15, 2016 by Finance Gourmet