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Mortgage Rates Lowest on Record

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Last week, the average rate on the 30-year fixed rate mortgage (FRM) fell to 2.98%. This is the lowest level in almost 50 years of recorded rates. With the cost of borrowing being so cheap, now may be the perfect time to refinance an existing mortgage or consider a new home purchase. Contacting a mortgage lender or originator could be of benefit to improving your financial position. How did we arrive at such low rates? As you know, the coronavirus pandemic rocked the economy. With a dark economic forecast, the Federal Reserve had to aggressively respond. One key action taken by the Federal Reserve was to lower interest rates. Investors also contributed to reducing rates by fleeing risk assets and investing in safe-haven assets, such as Treasuries. Remember, when an investment is in demand, its price moves higher. For bonds, as prices rise, yields or rates move lower. This is further illustrated by looking at the most popular debt instrument, the 10-year Treasury. The 10-
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Expect Q2 Earnings to be Horrible: What That Means for the Stock Market?

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The U.S economy was in a great spot prior to 2020, then Covid-19 quickly disrupted its course. The virus created new operational challenges for many companies, ultimately hindering a large percentage of the economy. As many companies either closed or operated at a limited capacity, it is easy to understand why their earnings would deteriorate.   So let’s discuss first quarter earnings, what analysts are anticipating moving forward, and how earnings affect the stock market. 1 st Quarter Earnings For Q1 2020, the earnings decline for the S&P 500 was -13.6%. This was a fairly large decline when compared to the -0.40% reading in Q1 2019.  Earnings estimates for Q2 are going to be horrible, showing an even steeper decline. 2 nd Quarter Earnings/Moving Forward   According to FactSet,   “For the second quarter, S&P 500 companies are expected to report a decline in earnings of -43.8% and a decline in revenues of -11.2%. For Q3 2020, analysts are projecting
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How to Handle Your 401(k) When You Leave a Job or Retire?

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As advisors, we often get asked “what should I do with my 401(k)?” The reason for this question is because most individuals will experience some type of transition throughout their careers. Some individuals leave their current employer and join a new one. Others, unfortunately, may face the hardship of being let go. Others, after enjoying a rewarding career, just retire. Regardless of the transition you face, you have four options for your 401(k): Keep it where it is in your existing plan. Roll it into the 401(k) at your new employer (if allowed). Roll it into an Individual Retirement Account (IRA). Cash it out, withdraw the funds. Let’s explore each option and what implications they have on the choice. Keep it Where it is To start, keeping your 401(k) where it is is pretty self-explanatory. It is the most common choice according to a recent study conducted by the Vanguard Group. The study found that investors who separated from their employers in 2018 were more like
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Cash Obsolete? Debit Cards, Credit Cards and Payment Apps

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Has it dawned on you yet how you no longer use physical cash as a form of payment for your day-to-day purchases? This struck me the other day, after I noticed coins still sitting on my desk from a very small cash purchase I made a few weeks ago. At that point, I realized I had become like most Americans.   We now pay for majority of our purchases with debit and credit cards, and payment apps. In fact, a survey from 2017, asked 1,000 consumers their payment preferences and it showed that 44% percent chose debit cards, 33% selected credit cards, and only 12% specified a preference for using cash. Consumers’ preference for credit cards decreased by 7% over the same survey's results from 2016, while the results for debit cards rose by 9%. Now, the popularity of the debit card can be attributed to a few reasons. First, a debit card eliminates the inconvenience of going to an ATM and having to withdraw physical cash. Another reason why people may prefer a debit card is because
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Back to School- 529 Savings Plans

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529 Savings Plans were created back in 1996 to allow individuals a tax-advantaged way to save and pay for education expenses. These plans have been very successful. In fact, The Center for Social Development found that children who have a 529 plan are approximately three times more likely to attend college. We will discuss the plans available and how they work.  Types of 529 Plans in Illinois Currently in Illinois, you can utilize two providers for 529 plans. One of the providers is Bright Star.   Here, participants manage the 529 plan on their own. The second provider is Bright Directions . This provider allows financial advisors to manage the 529 plan for you. Managing the plan involves selecting the custodian and beneficiary, as well as choosing the investments.   The custodian, an adult, is the person who makes the decisions for the plan.   Primarily this includes handling contributions, investments, and distributions.   The beneficiary is the person, usually a minor st
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Dying without an Estate Plan

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Last week, Aretha Franklin-Queen of Soul, passed away from pancreatic cancer. This week, the New York Times reported that Aretha died without a will or trust. Her estate, roughly 80 million dollars, will now become a public nightmare. The nightmare will start in probate court where her children will attempt to divide Aretha’s assets and pay her debts. This process can take years before it is settled, often destroying family relationships, while leaving the IRS and litigation attorneys the real winners. What is Estate Planning? Estate planning is the process of planning in advance to allocate your possessions to the people or organizations of your choice before death.   When you pass on, the whom , what and when needs to be answered for your assets and this is accomplished through proper estate planning. Will and Trust . A will or trust should be the main component of your estate plan. Wills ensure belongings, normally items without titles, are distributed according to the
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