Wealth Management News
"If the current annual inflation rate is 3 percent, why do my bills seem like they're 10 percent higher than last year?"
Many of us ask ourselves that question, and it illustrates the importance of understanding how inflation is reported and how it can affect investments.
Read the full Inflation & Your Money newsletter.
Investors are routinely warned about allowing their emotions to influence their decisions. However, they are not often cautioned about their preconceptions and biases that may color their financial choices.
In a battle between facts & biases, our biases may win. If we acknowledge this tendency, we may be able to avoid some unexamined choices when it comes to personal finance. It may actually "pay" to recognize blind spots and biases with investing. Here are some common examples of bias creeping into our financial lives.
Read the full Do Our Biases Affect Our Financial Choices? newsletter.
Stocks extended their rally in the second quarter, boosted by cooling inflation, the prospect of a shift in monetary policy, and enthusiasm over artificial intelligence. For the three months ending June 30, the Dow Jones Industrial Average added 3.41 percent while the Standard & Poor’s 500 Index picked up 8.30 percent. The Nasdaq Composite, which led in the first quarter, led again, gaining 12.81 percent.
Read the full Quarterly Market Insights newsletter.
Forty-two percent of Americans do not own any stocks or stock-related investments, according to a recent Gallup poll.
Individuals may cite different reasons for not investing, but with important long-term financial goals, such as retirement, in the balance, the reasons may not be good enough.
What Graham understood—and modern research is catching up to—is the idea that we all have emotions and biases that affect our decision-making. The innate wiring built to survive pre-modern times can be counterproductive in our modern world, especially when it comes to investing.
Let's take a quick look at a few of the human emotions and biases that can adversely impact sound investment decision-making.
Stocks posted solid gains in the first quarter as investors navigated corporate earnings, shifting monetary signals, and troubles in the banking sector. For the three months ending March 31, the Dow Jones Industrial Average rose 0.38 percent while the Standard & Poor’s 500 Index gained 7.03 percent. The Nasdaq Composite led, picking up 16.77 percent.
According to Yale University's Crash Confidence Index, only about 24% of investors are confident the stock market will not crash sometime during the next six months.1
If fear leads investors to avoid the entire investment class, they may limit their potential returns. For example, for most of the 10-year period between 2012 and 2022, stocks outperformed both cash and the 10-year treasury. Cash pulled ahead twice, once in 2018 and again in 2022. The 10-year treasury pulled ahead only once, in 2015.2
In the final days of 2022, Congress passed a new set of retirement rules designed to make it easier to contribute to retirement plans and access those funds earmarked for retirement. The law is called SECURE 2.0, and it's a follow-up to the Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in 2019.
The sweeping legislation has dozens of significant provisions, we have outlined the major provisions of the new law into four sections.
Stocks ended a volatile fourth quarter with a slight gain, helping to repair some of the damage since the beginning of the year. This sentiment was boosted by stronger-than-expected earnings, a deceleration in inflation, and the hope that the Fed would slow its pace of interest rate hikes.