The markets took a tumble last Thursday – the Dow Jones Industrial average falling more than 700 points, or about 3.0%. This marks the worst day in the market since February 8th. Yes, February 8th of 2018 – doesn’t seem like we are making history here.
In the past few weeks, there has been an increase in volatility in stock markets around the globe. The first bout of volatility spanning the last week of January and first week of February was caused by concern the Federal Reserve would raise interest rates at a faster pace than the markets were anticipating.
On December 22nd, the Tax Cuts and Jobs Act of 2017 signed into law changed the tax landscape for individuals and corporations. Although there are many modifications to the tax code that will affect all Americans, the mortgage interest itemized deduction directly affects current and future homeowners.
Talk of inflation has heated up in the last few weeks, with fears that higher than expected inflation could cause the Federal Reserve to raise interest rates at a faster pace. This was one of the contributing factors to the recent volatility in the stock market and has driven U.S. Treasury yields higher.
Certain aspects of the tax bill signed into law at the end of last year have received significant attention from investors, and rightfully so. The final version of the Tax Cuts and Jobs Act lowered corporate tax rates, realigned personal tax rates, and capped or eliminated certain deductions (i.e. state and local tax deductions).
I spent last week at the TD Ameritrade national conference in Orlando, Florida. Having the markets decline rapidly while at a conference with over 2,000 advisors was a pretty interesting experience – you would expect panic. Instead, it seemed the market downturn brought advisors a sigh of relief. Why?!
If you are a parent with a child in college or paying off debt yourself, you probably are all too familiar with the astounding costs of a college education. With the average annual cost of a four-year private college at $49,320, it’s important to be realistic about how much of the tuition will be funded by student loans.
Last year I wrote an article titled “The Shortcomings of Income Only Spending in Retirement,” which detailed the shortfalls of the popular strategy of spending only the income generated by a portfolio in retirement. In summary, the main drawback of income only spending is the tendency to increase portfolio risk when yields are low in order to generate more income.