Stock Market Reality Check and When To Panic

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10 years invested in SP500

I’ve written a few articles recently about the start of the year stock market freak out and about not panicking when the stock market makes sudden moves. In response I’ve heard from people about if there ever is a time to panic, and if there isn’t, if there is ever a right time to sell. The problem is that there is some knowledge missing from these questions. So, here is a reality check on the current stock market situation, and some advice on when to panic and when to sell your stocks. Long-Term Diversified Portfolio Let’s start from the beginning. There are a lot of different kinds of investing. When people forget this fact, it often causes them to make incorrect decisions. Remember, every decision you make should be consistent with your investing strategy and financial plan. So, for those of you investing for the long-term, particularly for retirement, with a decade or more to go, your reactions should be very different from someone who is investing for other reasons, or for a shorter time frame. As a long-term retirement investor, your strategy should be to construct a well diversified portfolio that matches your return needs with your risk tolerance. …

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Higher Minimum Wage in 2016

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minimum wage help wanted

We’ve talked a bit about minimum wage increases here before. In particular, I’m interested in the effects these minimum wage increases end up having. Most reports you read, whether positive or negative, are pretty much pure speculation, or cherry picking of data to fit an agenda. The reality is that the whole, higher minimum wage movement is still too young to produce the kinds of data needed to draw actual, mathematically and economically sound conclusions. Where Is Minimum Wage Higher in 2016? Part of the problem with knowing how higher minimum wage affects things is that it is nearly impossible to isolate individual geographic regions from the power of the national economy. This is particularly true for cities that are raising their minimum wage. Since employment in the U.S. is picking up after having been slammed by the Great Recession, most areas, regardless of minimum wage laws, are seeing higher employment. Still, the only way to find data is to look for it. First, the federal minimum wage is $7.25 per hour. No Minimum Wage Increase for 2016 There are seven states that either have no minimum wage laws, or a state minimum wage law below the federal minimum (Georgia, Wyoming). They …

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What Is Middle Class?

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middle class or not

Who is middle class in America, and why does it matter? Middle Class Politics One favorite political maneuver is to come out in favor of the middle class. There are a lot of reasons for this. First, and foremost is that numerous studies have shown that no matter how much money they actually make, most Americans think that they are middle class. Thus, when a politician says they care about the middle class, most people make the assumption that the politician is talking about them. On a secondary level, the value in favoring the middle class, is that there is a deeply American assumption that the middle class is where you will find the normal, hard-working American people. Those who are wealthy, can be assumed to be either exceptionally lucky, exceptionally hard working, or exceptionally smart, depending on who you ask. Realistically, it is all three. One need only look at the number of seemingly less than intelligent, or motivated, celebutaunt children who just luckily have wealthy parents, compared to the rags to riches stories of various immigrants or sons and daughters who were born into poverty. Whereas, the poor are the exceptionally unlucky, unhard working, or unintelligent. The fact that …

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Market Volatility Continues as Beginning of 2016

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Market Volatility Continues as Beginning of 2016 1

I’ve written a few articles now about the volatility in the U.S. stock market, especially as it pertains to reacting to China’s stock market (and the time before that too). A few years ago, the trouble was Greece, if you can remember that far back. Sometimes, it seems like last month is ancient history to market watchers. I’ve also written about how overreacting to bad news isn’t wise, but, what is really going on with the stock market, and what should real investors think? America vs The World Stock Market First, it is important to notice the difference between the American stock market reacting to news about the U.S. and the American economy, and reacting to the news and stock markets of other economies. While world economies are more intertwined than ever, the circumstances in China are not the same as they are here. While the Chinese economy is stuck in a tricky place thanks to ongoing government intervention, and rising debt loads, the U.S. economy actually could probably use a bit of government help. The markets don’t like uncertainty, though, and a lot of what you are seeing in the stock market today, and other days, is nothing more than …

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Standard Deduction 2011 and 2011 Tax Brackets

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Current Standard Deduction and Tax Brackets The IRS has announced new 2011 tax numbers regarding the standard deduction for single filers and for those married filing jointly, as well as the 2011 value of the personal and dependent deduction. By law, these standard tax numbers are adjusted for inflation each year. As a result, these tax deductions can increase or decrease depending upon how prices change. What Is the Standard Deduction for 2011 There was a small adjustment higher in most IRS tax numbers due to inflation. That means that most taxpayers should benefit from higher income limits and wider tax brackets than they had on their 2010 income taxes. Standard Deduction 2011 Taxpayers must choose whether to itemize their deduction or take the standard deduction on their income taxes. For most taxpayers whose income comes primarily from a job as a regular employee, the decision about whether it is better to itemize or claim the standard deduction on income taxes comes down to how much mortgage interest they pay. Basically, if the mortgage interest deduction available is higher than the standard deduction amount, then itemizing makes sense. The new standard deduction amount for 2011 is $11,600 for married couples …

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Personal Finance Index Card Advice

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Back in 2013 on a show, a professor named Harold Pollack made the suggestion that everything the average person actually needed to know about personal finance could fit on an index card. He “proved” his theory by handwriting a list of personal financial advice on an index card, which then made the internet rounds. Now, he’s back with a co-author, and a $25, 256-page book called The Index Card. Wow. Could this be the most cynical book ever written?   Free Financial Advice and Reality It always seems that when finance experts are talking about OTHER finance experts, that THOSE guys are over-priced crooks who you don’t need. THEY are just out to take your hard earned money. THEY don’t want you to know that finance is actually super easy and that you don’t need THEM. Funny, how that always changes dramatically when the opportunity for money or notary for their own self comes up. Back when I was a professional financial advisor, Susie Orman would stand up in front of as many people as she possibly could and say that all financial planners and advisors were crooks and you knew it because we took money from companies that offer financial products …

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China Stock Market Panic – Take 2

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china crash number 2

The stock market in China is in a free fall. Everyone panic! Wait. This seems familiar. Maybe, it’s because I wrote about this same thing just a few months ago during the August Chinese stock market crash. History. Learn. Repeat. Mistakes. Bad News the U.S. Economy I wrote a nice well-reasoned article recently about how you shouldn’t let bad news force you into making rash investment decisions. Here is another way to look at it courtesy of this repeat bit of stock market news. This time we have a nice little confluence of factors. There is, of course, the plunging China stock market, but this time around we have a little extra fear in the form of a nuclear test that North Korea claims is a hydrogen bomb test. (Last time, it was Middle East instability.) Well, that doesn’t sound fun? As if that weren’t enough, oil prices are falling again, and for some parts of the stock market, that’s bad. But, should we panic? George Soros isn’t helping. He’s in the news comparing today to 2008, you know when major U.S. banking institutions were failing and the Fed had to rush in to keep the whole American economy from seizing …

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New Year Finance Checklist

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annual personal finance checklist

It’s a new year. Contrary to popular opinion, for the most part, when it comes to money, finances, banking and investing, it doesn’t really matter if the year is new or not. That being said, plenty of people take the opportunity of a fresh calendar to take a fresh look at things like personal finance and their financial plans. So, here is a checklist of things to start thinking about to make sure you personal finances are lined up for 2016. 2016 Personal Finance Checklist Don’t get overwhelmed. Not all of this stuff needs to be done at once. Put a section on your calendar each week or two, and by the end of the first quarter, your finances will be reviewed, tuned-up, and ready for the year ahead. Banking Checklist Review your checking account statements and make sure your bank isn’t charging you fees just for having a checking or savings account. If you are paying monthly fees, or minimum balance fees, find a new account. Check with your current bank first, you might just be signed up for the wrong account. Remember, at today’s interest rates, there is no way having a higher rate compensates for having to …

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Fed Raises Interest Rates – Now What?

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interest rates federal reserve

This post was published in 2015. The Federal Reserve Raised interest rates today! It’s HISTORIC! It’s the FIRST ONE IN NEARLY A DECADE! WHAT HAPPENS NOW!?!?!  AGGGGHHHHH!!!! No Real Changes From Interest Rate Increases As we’ve discussed a bit before, there really isn’t as much big news in today’s announcement as you might think. First of all, this has been the most expected interest rate hike in history, so there is no one out there making rash decisions. In fact, there might have been more trouble if the Fed had not raised interest rates since that would have actually been surprising. In other words, the stock market, the bond market, and every market in between was already planning for, and pricing in today’s interest rate increase. This is why the stock market basically kept going the way it was already going before the meeting’s results were announced. Increases In Consumer Loans? Theoretically, an increase in the target interest rate from the Feds should raise the cost of consumer borrowing as well. However, a lot of credit products these days have minimum interest rates, and many products are still going to be at that minimum rate. For example, a credit card …

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Money Investing and Personal Finance End of Year

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end of year december finance money

Here comes the end of 2015, are you ready? Are your finances and investments ready? On the one hand, the end of the year means absolutely nothing to your money. Those twenties in your wallet don’t care what year it is, and your bank accounts don’t either. The stock market goes up and down before December 31st, just like it will after January 1st. That being said, there are some end of year tax issues to be aware of, as well as some smart money moves to make before the end of the year. What To Do With Money Before Year Ends Step One: Don’t Panic. Seriously. Too many people get all wrapped up in the end of the year and the start of a new year. I think that some of that comes from the added stress of the holidays, or the vacuum left behind when they end. The reality is that you and your money are probably fine, even if you don’t do anything at all before the year ends. Yes, tax deductions matter, but probably not as much as you might think. And, yes, there are deadlines, but many of them may not apply to you. With that …

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