I hope everyone is staying safe and healthy.
Welcome to September. At the beginning of the pandemic, time seemed to stand still. Since then it feels like it’s moving even faster than normal. It’s hard to believe a new school year has started. Back-to-school has a different meaning this year. We have two kids in high school and one in college this year. Their classes will be virtual for the first half of the year. Hopefully, classes will be in-person in person for the year's second half. The benefits of socialization associated with school are diminished when classes are virtual.
After another record-setting session on Wednesday, the market’s climb came to a screeching halt on Thursday. The large technology stocks that have driven the recent rally led the sell-off. What spooked investors? Nobody knows for sure. The following factors could have contributed:
· A well-deserved pause after strong returns in August.
· While new unemployment claims have fallen, they remain elevated.
· Heavy levels of options trading.
· Concerns about the upcoming elections.
· Renewed tensions between the U.S. and China.
· Delays in reaching an agreement on a new fiscal stimulus package.
When it comes to the markets and investing, try to keep your emotions in check. Don’t get too greedy when the market rises or too fearful when it falls. It’s important to keep the long term in mind and have a consistent process. Keeping things in context also helps. After Thursday's decline the S&P 500 was modestly above its closing level on August 25th. In other words, about a week's worth of gains were lost.
As of Thursday’s, close, the S&P 500 Index was up 6.9% year-to-date. The S&P also finished Thursday 2.0% above its pre-pandemic high set on February 19th. The S&P has increased more than 54% from its March 23rd low. This has been a historic run.
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Here are the links to this week’s articles as well as a brief description of each:
1. What the Federal Reserve Inflation Policy Means for Your Retirement Savings. We have been in a low-interest-rate environment for some time. The pandemic has driven rates even lower. The Fed’s new policy may keep them low for the foreseeable future, too. Low interest rates can benefit consumers. But they can negatively impact retirement savings. They can also limit the income your investments provide.
2. Seven Ways to Find Your Purpose in Life. Having a purpose in life can provide many benefits. Research suggests it can lead to better health, longevity, and even economic success. Plus, it can make us feel good. How do you go about finding a sense of purpose if it’s not obvious to you? Can it come naturally? Can you take steps to encourage more purpose in your life? For most, being famous does not provide purpose to life. Taking small steps in the direction that means most to you can be more meaningful.
3. Is Delaying Social Security Still Smart? Most financial planners recommend waiting as long as possible to start collecting Social Security benefits. Why? Even when you reach full retirement age (67 for those born in 1960 or later), your benefit continues to grow until you reach age 70. Even better, the growth in your benefit is permanent. It can also help a surviving spouse who doesn’t claim based on his/her work record. The decision should be made in the broader context of your overall financial plan. While there are no guarantees, assuming that Social Security benefits will fall to zero is likely a mistake.
4. The 5 Biggest Life Lessons This Dad Learned From His 4-Year-Old: ‘Why Can’t Most AdultsGet This?’ Parents teach their children many things. We often forget that we can learn from them, too. In this article, one of my favorite personal finance writers, Morgan Housel, shares the top five life lessons he learned from his kid:
· Communicate early
· Low expectations increase your happiness
· Put it behind you and move on
· Be curious about everything
· Pretend no one is watching
5. Here’s What Your Medicare Costs Could Look Like in Retirement. Healthcare costs in retirement can be significant. Most retirees will rely on Medicare for their primary medical insurance coverage. Basic coverage is provided under premium-free Part A. Part B premiums are impacted by your earnings. You may also consider a “Medigap” policy (Plan G). Prescription drug coverage under Part D can help. You can sign up for an Advantage Plan (Part C), which is sold by private insurance companies.
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