The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.As the season turns to summer and all of the joy that its weather can bring, there are a few things to be aware of as the dog days roll on. While the fresh air and bright sunshine bring an undeniable spirit of happiness for those of us who struggle through Michigan winters, there are positive and negative developments in the financial industry and the economy as a whole that may warrant a watchful eye going forward. Here are 3 developments to watch this summer that may have an effect on your financial situation.
1. Rising interest rates
This topic has been talked about at length not only in the national media, but here in this blog as well. The reason I bring it up again is because the interest rate hikes that the Federal Reserve is implementing are causing uncertainty in the markets. The stock market tries to price in rate hikes before they happen so that when the hikes occur the market does not experience massive sell offs and increased volatility. The problem is these hikes are not always priced in correctly, meaning there is still uncertainty because the Fed may choose to raise rates higher than expected and vice versa. Raising rates is one of the main ways the fed is trying to curb inflation. As of today, Friday June 10th, prices have increased 8.6% in May year over year according to data released by the Bureau of Labor Statistics. This is an increase year over year from April. What does this mean? The hikes so far have not slowed inflation at the rate that many expected, which could mean we see higher interest rate increases moving forward. So, be prepared for short-term volatility in the stock market.
2. Continued volatility
As the markets continue to tumble and we near bear market levels in the Dow Jones, S&P 500, and NASDAQ indexes, the opportunity to buy in at lower prices presents itself. The hit that your portfolio is taking right now is difficult to watch, as we have talked about. The drop in the markets positively means that the money you invest will buy more shares of what you are investing in than if the price were higher. It also is a great time to start investing if you never have! It might be a good idea to start thinking about investing or to start thinking about getting your kids started while it is “cheap” to buy in! Compounding interest is a beautiful thing and it is never too late OR too early to start investing for your retirement.
3. Continued changes in addition to the SECURE Act 2.0
We have already written a blog post about the SECURE Act 2.0, which you can access here, but there are new laws being introduced in the chambers of congress to build on what the act establishes. I won’t give away everything that the law says, but it is intended to make some pretty big changes to retirement saving rules. Again, you can read more in this blog we posted a month and a half ago. Catching up on the SECURE Act 2.0 and any additions congress may make this summer may provide for some interesting reading if you ever find yourself with more time than you know what to do with.
All of us here at Provisio hope you are having a great start to your summer!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.