Category Archives: Sign of the Times

Financing Your Future: Paying for College

By Mark Albers, CPA, MST, CFP® | Senior Associate Consultant

Across the country, many people have started or returned to school over the past two weeks. For those attending colleges and universities, a tuition bill awaited them. The average annual undergraduate tuition, room and board expenses for last school year were $18,391 for in-state students at a four-year public institution and $40,917 at a four-year private nonprofit institution1. Those become significant expenses over the course of a college career, and often leave people wondering, “How am I going to pay for this?”

Thankfully, there are a number of resources available to help students and their families pay for their college education. Each resource has its own benefits and disadvantages that should be considered, and most often a student will end up using a mix of several resources.
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Charitable Children in the Making

By Gretchen Halpin | Chief Strategy Officer

In my last blog post, A Mom’s Money Moment, I reflected on how my children thought about money, saving and investing in their future. For many families, charitable giving also plays a role in the young relationship our kids have with money.

As parents or grandparents, we universally wish for our children to have a sense of empathy for their fellow human beings’ needs, but how do we not only educate but implement charitable giving as a part of money management education?

Raising Charitable ChildrenWith digital currency becoming more and more the norm – gift cards and product code gifts replacing the traditional money in the card – it becomes increasingly difficult to demonstrate an allocation of funds to charity.  However, the same technology that takes away the paper money aspects of giving also creates huge opportunities for young kids to participate in a more sophisticated way.  For example, starting an online fundraiser or creating a social campaign is only a few clicks away on crowdsourcing sites such as Indiegogo, CrowdRise and GoFundMe. These sorts of initiatives, with proper parental supervision and support, show children that even the smallest donation or contribution can make a considerable impact—especially when you work with others.

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Keep It Simple (Revisited)

By Martha Post, CFA | Chief Investment Officer

End-of-year recaps have highlighted the remarkable market advance that occurred despite any number of troubling economic and fiscal events in 2013.  US stocks led the way–the S&P 500 closed out 2013 with its best year since 1997 (+32%).  It hit a new all-time high on the last day of the year, bringing the total gain since March 9, 2009 to 173%. [1]  Investors in broadly diversified portfolios of equity and fixed income assets are gratified to have recovered their bear market losses and more.

keep it simpleWhile the gain last year was outsize, it is not surprising to us that investors would be rewarded by remaining invested (in fact, rebalancing into equities) after the crash.  From our perspective, the basics of investing are pretty simple—choose an asset allocation that is designed to meet your long-term objectives for risk and return, invest in a low-cost, globally diversified portfolio that is managed for taxes, and stay disciplined by rebalancing after significant market movements.

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Our Best Forecast Ever


By Sergey Bubnou | Research Analyst

Economic ForecastIn a recent interview, Jeremy Siegel, the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania and a “Market Master” on CNBC, was praised for his ability to predict the stock market’s gains in 2013.  “Thank you,” he said.  “I’ve gotten quite a few media contacts and congratulations because I said in January 2012 that the Dow would finish this year between 16,000 and 17,000.  I’ve learned that humility, rather than hubris, is the proper response to a good market prediction,” he added.[1]  The Dow Jones Industrial Average closed at 16,020 on Friday, December 6.[2]  This would seem like a rather definitive affirmation of Professor Siegel’s predictive powers.

But a certain amount of humility may be required, as the professor pointed out.  Turn back the clock five years, and here’s what Professor Siegel had to say in February 2008:

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Staying on Course and Out of the Way of the Kicked Cans

By Martha Post, CFA | Principal / Chief Investment Officer 

As expected, lawmakers in Washington took us to the brink but not beyond, ending their standoff Tuesday night in last-minute votes to approve a plan negotiated by Senate leaders from both parties.  President Obama signed the bill, which suspends the debt limit through February 7 and funds the government through January 15, shortly after midnight on the day the debt limit was expected to be reached.  Default was averted, and the government re-opened.

While the immediate crisis was avoided, there was no resolution to the ongoing fiscal issues around the deficit and spending.  Those will wait for another day, as has become habit.  The bill that passed was for spending at the 2011 level, and it included a directive to the House and Senate to negotiate a new long-term budget accord by December 13.  Standard & Poor’s estimates that the shutdown will cost the economy $24 billion and will cut .6% from fourth quarter GDP.[1]

As we suggested in a previous letter, the markets seem to have anticipated the result.  On Wednesday, when it became clear that a deal was in the works, the S&P 500 shot up to close out the day with a 1.4% gain.  We didn’t need the uncertainty and worry, but it turned out to be another example of why we are better off not letting political events intrude on our long-term investment plans.

Sometimes the value of staying the course and maintaining market exposure only becomes apparent over long time periods.  Here was a case where it hit you in the face very fast—over the 16 days of the shutdown, the S&P 500 was up 2.4%.  That’s a number you might expect for a full quarter’s return, not the kind of result fear mongers and market timers like to hear.  Yesterday, the index hit all-time highs.  That’s not to say it will keep going up from here.  It may or it may not.  And we’ll see what the next budget and debt deadlines bring.

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Shut Down: One Week and Counting

By Martha Post | Chief Investment Officer

As a very successful third quarter in the financial markets drew to a close last week, politics reared its ugly head once again.  The federal government “shut down” October 1 after our friends in Washington failed to agree on a resolution to extend government funding into the new fiscal year.  Up next?  The potentially more serious debt ceiling, which is expected to be reached on October 17.

The immediate reaction was a lot of frustration with the dysfunctional group in Washington but general agreement that the partial shutdown itself was not a cause for panic.  Essential services continue.  The market took it in stride on day one, with the S&P 500 actually gaining .80%, and then giving back about 1% over the next two days.  This is not out of line with what we have seen during government shutdowns in the past.  There have been 17 occasions in total before this one, the most recent in 1995-1996.  On average, the S&P 500 has fallen .3% during the shutdowns and gained back .9% in the 10 days following[1].

One of my colleagues was in Washington, DC last week and noted that the most visible impact in the capital seemed to be the inability of visitors to tour the monuments.  Not facetious or insensitive, just indicative of the level of pain most people (aside from furloughed workers) have felt so far.

It was easy to overlook a really strong third quarter amidst the government drama.  The S&P 500 was up 5.2%, small cap stocks almost double that.  International stocks shot up as well, 11.6% in developed markets, and 5.8% in emerging.  That brings the S&P 500’s return to +19.8% for the first three quarters of 2013[2].  Bonds even eked out gains for the quarter as taper talk waned.  It is likely that given the stories on the evening news, most people are unaware of the strong market performance.  And it is a good reminder that economic news is not always market news.  Market prices likely already reflected the notion that there is risk in the fiscal policy.

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Stick with the Intermediate Bond Strategy

By John Bussel | Principal, Regional Director

As we near the fifth anniversary of the collapse of Lehman Brothers and the ensuing financial crisis, it is reassuring that year by year, while slow and bumpy at times, we have a come a long way from the fears of complete national financial ruin and the days when some even feared that ATM machines would not be able to dispense cash.  After years of massive fiscal and monetary intervention by the US Government, the crutches are gradually being taken away and, although very early in this process, so far the economy has not fallen on its face.  A certain normalization in financial markets is taking place as they factor in less intervention.  One result has been a shift upward in longer-term interest rates this year as represented by the ten year Treasury note whose yield has roughly doubled from 1.5% to almost 3%. [1]

What happens next to interest rates?  Should we change our approach to investing in fixed income?  The answer to the first question is that we do not know.  Predicting the direction and magnitude of interest rates is notoriously difficult…it makes predicting the stock market seem easy.  Which makes the answer to the second question a definitive NO.  Intermediate bond strategy managers are generally committed to holding a portfolio of bonds whose average maturity and sensitivity to interest rate changes (known as duration) is neither short-term (with maturities of less than three years) or long-term (maturities of more than ten years).  This approach constrains the managers to not make big bets on interest rate movements but rather focuses on maximizing returns within a boundary that historically represents the best risk/reward profile in the bond market.

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For Better or Worse? The Marital Gap

By: Lisa Berlage

There appears to be an ever widening gap between what married and single households are able to save. What are some of the factors that may contribute to this divide and can anything be done to potentially minimize the gap?

Married Versus Single Household Savings

married households savingsOn one side of the divide, married households typically make more money overall, but may have more overall expenses as well. On the other side, single households don’t have the benefit of a double income or sharing expenses, also known as “economies of scale,” with a spouse.

Divorce may be one reason for the expanding marital gap in finances. In divorce, assets are divided and legal expenses can be a tremendous drain on savings. Also, if children are involved, the impact of having two separate residences and child support can be overwhelming. According to an online survey, divorced workers (who are typically 5 years-plus older than un-divorced counterparts) on average have $113,000 saved for retirement while married workers have $124,000 saved for retirement.[1]

Another possible reason for the marital gap in savings may be the death or illness of a spouse. An unexpected loss could cause a severe drain on current and future resources, especially if applicable insurance coverage wasn’t in place to minimize medical expenses or to offset the loss of a spouse’s future earnings.

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Big Gaps and Big Finance—An American Narrative

By: Nima Tolooi 

Last week, we covered the Generation Gap, disparities between the financial attitudes and outlook of baby boomers, Gen-X’ers, and Millennials. This week we focus on the Gender Gap, something we’ve written about at length:

The Gender Gap

the gender gapIn reviewing some of the past analysis, we find that the gap spans both ends of the economic spectrum like trapeze artists swinging at different altitudes with ever-rising stakes, but with a flayed safety net waiting impatiently beneath.

Unquestionably, those at the bottom rung of the spectrum are situated much higher in this analogy:

So the issue is one of scale as well as degree. When politicians, economists and sociologists speak of the gender gap, they muddy the dialogue with different assumptions, different responsibilities and different audiences in mind. Overall, the “gap” refers to the gender-based disparity of access at whichever level, one predicated on available resources and opportunities and their respective distribution and protection.

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The Generation Gap

A Comparison of Financial Attitudes and Health between Generational Groups

By McKenzie Sullivan | Associate Consultant

Consider each stage of your life and examine how your attitude towards money and your financial health has evolved. This exercise can bring many experiences to the surface from various stages of your life, which likely have influenced how you got to where you are today. Many of us are still working towards our financial goals and could be facing certain concerns and obstacles. In the following article, we’ll review some of the challenges that different generational groups may be experiencing, along with some tips to overcome those obstacles.

generational gaps

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