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Ponderings For the Week of June 24 to 30, 2019

Major Stock Indexes Achieve or Near Record Highs

The markets have been reacting positively to bad news in recent weeks. So investors held their collective breath amidst last week’s good news, including the likelihood of imminent Federal Reserve action to lower interest rates (lower rates typically engender higher stock prices) as well as further evidence that the tariff tiff between the U.S. and China is abating. But not to worry, as stocks posted broad gains. For the week, the Dow Jones Industrials, S&P 500, and NASDAQ Composite indexes gained over 2%, as did the average international stock.  

With a mere five trading days left in the month – and first half of the year, investors are poised to enjoy the best June performance in over 50 years. So much for the old adage: “Sell in May and go away” (until the fall). Of course, one good month does not necessarily beget strong ensuing months. That’s on the minds of rational investors who keep wondering and worrying about when this methuselahian bull market will end. It’s prudent to worry, but not so much that it results in wholesale changes to your diversification. Better to simply rebalance your holdings that will move a reasonable portion of your recent stock gains into lower-risk securities.  


Money Matters to Consider Before Changing Careers

I’m a financial guy, so my caveats for career changers are all about money. Changing careers can have substantial financial ramifications. Here are some money matters of concern for anyone – you or perhaps a family member – who is contemplating a career change.

  • What will additional education or training cost?  
  • Will you need to leave your current job in order to obtain the education and training necessary to embark on the new career?  If so, do you have the financial wherewithal to finance both education/training costs and living expenses or will borrowing be required?
  • Will you have to sacrifice retirement benefits, e.g., a pension plan or employer contributions to a retirement savings plan, should you leave your current job?  
  • Will jobs in the new career be easy to come by or will a period of unemployment or underemployment need to be factored in?
  • What is the employment outlook in the new occupation, not only in the near future, but also over the remainder of your working life? As in the past, many occupations that are currently thriving will be gone or greatly diminished in the not too distant future.
  • How will the expected income and fringe benefits in your new career compare with your current situation?  If it will be less, a household budget and a financial forecast should be prepared. Ideally, you will curtail your current spending to the level expected in the new career to see firsthand how it will affect family lifestyle.

Please forgive me if you think I’m raining on your parade. After all, embarking on a new career can be both exciting and satisfying. But you shouldn’t view it through rose-colored glasses. Focusing objectively on the all-important financial implications of a move to a new career is an essential exercise.



Smart Money Tips

  • Keep your eyes on the retirement prize.  Everything you do in your financial life, from saving to investing, from obtaining insurance to controlling your debt, is geared toward one overriding goal: to be able to afford to retire and, once you’re retired, to thrive financially throughout your retirement years. Arranging your financial life around that goal is not something that is best begun a year or two before retirement – or forgotten a year or two after you retire. The earlier you begin to think of all facets of your financial life in the context of retirement, the better able you will be to retire in fine fettle. 
  • It’s time to practice “Reverse Keeping up with the Joneses.” Since the recession, consumers seemed more inclined to save than spend, but recent reports indicate that consumer spending is on the rise, particularly for luxury items. If your neighbor just bought a $60,000 car, you may fear being derided about your less-than-spectacular ride. But instead of trying to keep up with the Joneses, I recommend that my disciples practice the reverse. In other words, while it’s important for us as a nation to spend abundantly since consumer spending is essential to fueling the economy, you don’t have to be a good citizen in this instance. So my advice is to simply sit back and let your neighbors, friends, and everyone else consume with alacrity while you quietly restrain your spending. Then we have the best of both worlds – robust consumer spending while you are saving for a more prosperous future.






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