Trump, Brexit: Wealth Economic Update Jan. 20, 2017

U.S. and World News

  • president_podiumDonald J. Trump was inaugurated as the 45th President of the United States on Friday morning. His inauguration address stressed the importance of putting America first in all aspects including business and defense. The address was filled with promises of a more prosperous and safer country. While no specifics were given in his speech, President Trump guaranteed that the status quo of Washington D.C. would be shaken up and change was on the horizon.
  • This week British Prime Minister Theresa May laid out more plans for the coming Brexit, saying that the country will not seek a deal that leaves it “half in, half out” of the European Union. This confirmed fears of a “hard Brexit” in which the nation would leave the EU’s single market and regain full control of Britain’s borders. Also, in a speech at the World Economic Forum in Davos, May vowed that, “The U.K. will step up to a new leadership role as the strongest and most forceful advocate for free markets and free trade anywhere in the world.”

Markets

  • This week the S&P 500 dipped modestly by 0.13%, closing at 2,271. The Dow Jones Industrial Average decreased by 0.24% and closed at 19,827.
  • Interest rates rose a bit this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.94% and 2.47%, respectively.
  • The spot price of WTI Crude Oil declined by 0.20% this week and closed at $52.42 per barrel.
  • The spot price of Gold increased by 1.08% this week, closing at $1,210.32 per ounce.

Economic Data

  • Weekly initial jobless claims came in at 235,000, a decrease from last week’s reading of 247,000. The Labor Department noted no major distortions to the data this week. The four week moving average for jobless claims now stands at 247,000 which is the lowest since 1973.
  • The Consumer Price Index (measure of inflation) rose 0.3% in December which was in line with expectations. The headline figure was boosted by a 1.5% rise in energy prices and have now risen 2.1% over the last 12 months.

o   The Core Consumer Price Index (excludes food and energy) rose by 0.2%, also in line with forecasts. Over the last year, core inflation stands at 2.2%.

  • Housing starts increased by 11.3% in December, bouncing back following a large decline in November. The rebound was solely in the multi-family category which increased by 57.3% in the month. Single family starts actually saw another decline in December, falling by 4.0%.

Fact of the Week

  • President Obama leaves office having presided over one of the best stock market return environments in American history. Since his inauguration in January 2009, the S&P 500 gained 182% or an annualized return of 16.3%. Since 1928, those market returns were only surpassed by the presidency of Bill Clinton (15.2% annualized return). (Source: Wall Street Journal)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Obamacare, Cuba: Wealth Economic Update Jan. 13, 2017

U.S. and World News

  • medical-522306108_360Following a seven hour debate, the Senate narrowly passed a budget resolution this week, clearing the first major hurdle in the Republican effort to repeal Obamacare. House leaders have now taken on the resolution amid pressure from President-elect Donald Trump who has said that a repeal and replacement of Obamacare should happen essentially simultaneously.
  • A week before leaving office, President Obama announced an end to the “wet foot, dry foot” policy that allowed Cubans who arrived in the United States without visas to pursue residency after one year. This will likely mark his last major change that his administration will make to U.S.-Cuba relations after he previously lifted the long standing embargo with the country and cleared the way for travel to the island nation.

Markets

  • This week the S&P 500 dipped modestly by 0.10%, closing at 2,275. The Dow Jones Industrial Average decreased by 0.39% and closed at 19,886.
  • Interest rates continued to retreat a bit from their recent highs. The 5 year and 10 year U.S. Treasury Notes now yield 1.90% and 2.40%, respectively.
  • The spot price of WTI Crude Oil declined by 2.72% this week and closed at $52.52 per barrel.
  • The spot price of Gold increased by 2.11% this week, closing at $1,197.34 per ounce.

Economic Data

  • Weekly initial jobless claims came in at 247,000, an increase from last week’s reading of 235,000. The Labor Department noted no major distortions to the data this week. The four week moving average for jobless claims now stands at 257,000.
  • Headline retail sales for the month of December grew 0.6%, slightly below expectations of 0.7%. The headline number was aided by gains in gas prices and vehicle sales. Core retail sales (excludes autos, gas stations, building materials) was up only 0.2%, below expectations of 0.4%. The report showed non-store retail (includes online shopping) improving by 1.3% during the month but sales for department stores, electronics stores and restaurants declining.
  • The University of Michigan consumer sentiment index was approximately unchanged at 98.1 in the preliminary January report, following a sizable increase in December. The measure of current conditions increased, while the survey’s expectations of the future decreased a bit.

Fact of the Week

  • According to the American Society of Civil Engineers, the United States will need to spend $3.32 trillion over the next decade to fix our nation’s infrastructure, including $2.04 trillion on roads and bridges.

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

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Tips for Keeping Your Financial Resolutions

Joseph Huml, Vice President/Retail Regional Manager huml_portrait

Whether you are among the 41 percent of Americans who typically head into the new year equipped with a list of resolutions or are among those who just want to get your finances in shape, knowing how to move the dial from intent to progress can be tough.[1]

Here are some tips to help you succeed in boosting your financial health in 2017.

  1. Conduct a credit cleanup. Sometimes it helps to clear the slate by consolidating high-interest debt into lower rate loans. Homeowners, in particular, often find financial relief—along with financing for home repairs or unexpected expenses—by using a home equity line of credit (HELOC). Not only is the interest rate on this type of debt more affordable than other types of personal loans, the interest you pay may also be tax deductible.
  1. Join the club. To avoid feeling overextended by holiday spending next January, open a Club Savings Account this January. Arrange to have a small amount ($10–$25) transferred from your checking account with each paycheck. In late November, the accumulated amount will be transferred back into your checking account just in time for you to start shopping for the 2017 holiday season.
  1. Get more than credit. Compare the rates and rewards you receive on your current credit card to see if there are more attractive deals out there. Also, with many issuers offering attractive introductory rates for new accounts, moving your outstanding balances could potentially save you money.
  1. Up your reserve. While having an emergency reserve equal to at least three months of your regular expenses is advisable, it can be hard to achieve. A more attainable goal is to try to build up your emergency reserve gradually. For instance, consider setting up an automatic deposit for a modest amount from each paycheck that will allow you to end up with an additional month’s worth of emergency reserve by year-end.
  1. Experiment with bursts of retirement savings. While it’s hard to hit the maximum contribution limit to your retirement savings account each month, try raising your contribution during the three months a year when your expenses are lighter. These short bursts can add up over time.
  1. Get a second opinion. Take advantage of free investment consultations when they are available. Sometimes, a banker can see a better way to save on fees or interest expenses and may be able to provide insights into ways of allocating your investments for expected market changes.
  1. Improve your score. Review your credit reports and scores at least annually. Since your score influences the interest rates you pay—and even employers and landlords look at them—it’s beneficial to make sure yours is as high as possible. When you review your credit reports, look for any errors or omissions. Pay attention to the timeliness of the payments you do make. Late payments and skipped payments are the biggest detractors to your score.

For more information on how we can help you keep up your resolve to improve your finances this year, visit us here or call 1-877-866-0202. We can’t wait to talk to you about what we can do to help you make this your best financial year yet.

Rate forecast, OPEC: Wealth Economic Update Jan. 9, 2017

U.S. and World News

  • money_chess-523185447_360Minutes from the December Federal Reserve meeting were released this week, giving insight into the Committee’s discussions leading up to the only Fed Funds rate increase of 2016. The transcripts showed that part of the reasoning behind the 0.25% rate hike was an expectation of coming fiscal stimulus under an upcoming Trump presidency. The Federal Reserve will meet again at the end of January but no further action is expected to be taken until the March meeting at the earliest.
  • The start of the year marked the beginning of the deal agreed upon by OPEC countries to reduce oil production and so far it appears as though all parties are complying with the agreement. OPEC and some non-OPEC member countries agreed last November to decrease crude output by 200,000 barrels per day in an effort to support prices and several countries, including Iraq, have already taken measures to reduce production.

Markets

  • This week the S&P 500 kicked off 2017 by rising 1.76%, closing at 2,277. The Dow Jones Industrial Average increased by 1.07% and closed at 19,763. The Dow was unable to reach the 20,000 milestone again this week, coming within 0.37 points of the elusive mark.
  • Interest rates continued to retreat a bit from their recent highs. The 5 year and 10 year U.S. Treasury Notes now yield 1.92% and 2.42%, respectively.
  • The spot price of WTI Crude Oil declined by 0.24% this week and closed at $53.70 per barrel.
  • The spot price of Gold increased by 2.19% this week, ending the year at $1,172.63 per ounce.

Economic Data

  • Weekly initial jobless claims came in at 235,000, a decrease from last week’s reading of 265,000. The Labor Department noted no major distortions to the data this week. The four week moving average for jobless claims now stands at 257,000.
  • The December payroll report showed a gain of 156,000 jobs in the month, lower than consensus forecasts of 175,000. The prior two months’ figures were revised up by a total of 19,000 which brings the three month average for job gains to 165,000.
    • The headline unemployment rate rose by 0.1% to 4.7%, in line with expectations. The small tick up in the unemployment rate was the result of a 0.1% increase in the labor force participation rate to 62.7%.
    • Average hourly earnings rose 0.4% in December, better than expectations of 0.3%. Over the last 12 months, wages have grown 2.9%, the highest mark during the recovery.
  • The ISM manufacturing index increased to a two-year high of 54.7 in December, rising from 53.2 in November. This was another positive data point indicating further signs of recovery in the U.S. manufacturing sector.

Fact of the Week

  • The total return for the S&P 500 during 2016 was +12.0%. If you missed the 3 best percentage gain days last year, that 12.0% return falls to 4.4%. If you avoided the 3 worst percentage loss days last year, that 12.0% gain rises to a 22.1% gain. (Source: BTN Research)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Russia-Election, Turkey: Wealth Economic Update Dec. 30, 2016

U.S. and World News

  • In response to its alleged hacking and interference in the 2016 presidential election, the Obama administration announced new sanctions against Russia this week, including expelling 35 Russian diplomats and closing two Russian compounds in the U.S. The White House stated, “Russia’s cyber activities were intended to influence the election, erode faith in U.S. democratic institutions, sow doubt about the integrity of our electoral process, and undermine confidence in the institutions of the U.S. government.” Russian President Vladimir Putin has announced that Moscow will not retaliate in-kind and will refrain from expelling U.S. diplomats from the country, a decision that was praised by President-Elect Donald Trump in a Friday afternoon tweet.
  • Expanding on the truce that was established in Aleppo earlier this month, Russia and Turkey have brokered a nationwide ceasefire in Syria. The agreement would come into force in all regions where fighting between pro-government forces and opposition groups is taking place. The accord is already off to a shaky start as just after the ceasefire was set to take effect, it was reported that clashes between insurgents and government forces took place in several locations.

Markets

  • This week the S&P 500 fell by 1.07% and closed at 2,239. The Dow Jones Industrial Average decreased by 0.46% and closed the year at 19,763 and was unable to reach the 20,000 milestone in 2016. For the year, the S&P rose 11.77% and the Dow climbed 16.16%.
  • Interest rates continued to retreat from their recent highs this week. The 5 year and 10 year U.S. Treasury Notes now yield 1.93% and 2.45%, respectively.
  • The spot price of WTI Crude Oil rose by 1.49% this week and closed 2016 at $53.83 per barrel. WTI Crude was up 34.40% in 2016.
  • The spot price of Gold increased by 1.59% this week, ending the year at $1,151.35 per ounce. In 2016, gold prices rose 8.50%.

Economic Data

  • Weekly initial jobless claims came in at 265,000, a decrease from last week’s reading of 275,000. The Labor Department noted not major distortions to the data this week. The four week moving average for jobless claims now stands at 263,000.
  • The Case-Shiller home price index rose by 0.6% in October, beating expectations of 0.5%. Prices rose in all 20 cities measured by the index and have now risen 5.1% over the last 12 months.
  • Pending home sales fell 2.5% in November to a 10-month low. Pending sales fell in the West (-6.7%), Midwest (-2.5%) and South (-1.2%) but rose in the Northeast (+0.6%). The weak report may be an indication that higher mortgage rates are beginning to affect demand.

Fact of the Week

  • The number of electronic devices that are connected to the internet (ie. laptops, phones, care, appliances etc.) surpassed the world’s population in 2010. By 2020, the number of connected devices will reach 50 billion, or almost 7 times the world’s population of 7.3 billion. (Source: Federal Trade Commission)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

The One Thing You Need to Know About Investing

Steve Meves, Senior Vice President/Chief Investment Officer, Wealth Managementmevess_bus009xqc

Investing is about using the money you’ve saved to purchase an asset that will hopefully appreciate over time. The key word in that last sentence is “time.” Giving your investments sufficient time to grow, regardless of what you are investing in, is the hard part. It’s also a key ingredient to building wealth.

Market Movements Are Noise

The financial markets go up and down, sometimes within the same day. But throughout history, they’ve kept climbing. The indexes we use to measure investment results—the Dow Jones Industrial Index and the S&P 500 Index—reflect this jagged climb. It’s this historical proof of resilience through wars, political mayhem and underperformance that allows professional wealth managers to remain calm in the face of sell-offs. They’ve seen the charts and looked at the data on market closes. And, they know that sell-offs end with recoveries. These recoveries may take time, but eventually they occur and have led to a resumption in the historical upward trend.

Go Long

The mistake many investors make is in assuming they need to do something when markets sell off. That’s only natural. It hurts to see your account balances decline, even if it’s a short-term occurrence. Our brains are hard wired to feel the pain of a loss—in this case money—more intensely than we feel the joy of a gain. It’s why we are intuitively risk averse. No one likes the way they feel when they lose.

When markets do sell off—whether during a day, over several weeks or even months—we all impulsively want to avoid further pain by selling. Some even want to anticipate the loss by selling before markets ever start selling off.

Taking evasive action may feel good in the short run, but it can destroy investment results in the long run, because you need to be right about the market continuing to go down when you are out of the market. More importantly, you also need to be in the market during its recoveries in order to benefit. It’s hard to know on any given day the kind of day it will be.

When Is the Right Time to Invest?

When you are an investor and take a long-term view, any time can be the right time depending on what you are investing in. Therefore, it’s advisable to have access to wealth managers who actively monitor markets daily to determine when it makes sense to pull back on investing in securities, or types of securities, and when to add more. It’s also our job to keep emotions like loss avoidance from endangering your overall goals so that your portfolio is diversified over different types of assets. That way, it’s better positioned to withstand volatility in any one type of asset.

In the end, the secret to successful investing is to remain focused on why you invest: to build wealth over time.

For more information on how our goal-driven wealth management services keep you on task over the long term, visit us here or call 630-801-2217. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Yellen, ISIS-Germany: Wealth Economic Update Dec. 27, 2016

U.S. and World News

  • baltimore-184943883_360After the Federal Reserve raised interest rates for the first time in a year, Fed Chairwoman Janet Yellen spoke in Baltimore about the economy, specifically regarding the job market and wages. In her speech, she told 2016 University of Baltimore graduates that they are “entering the strongest U.S. jobs market in nearly a decade” as the U.S. unemployment rate sits at 4.6%, its lowest level since 2007. Janet Yellen did not speak to anything relating to monetary policy, but did mention that wages continue to increase despite low economic growth.
  • ISIS has claimed responsibility for a man by the name of Anis Amri, who intentionally drove a truck through a crowded Christmas market in Berlin killing 12 and injuring 50 people. Chancellor Angela Merkel is being criticized for her security policies after it was discovered that in the past, Anis Amri was secretly under surveillance and considered a threat by German officials but the operation was later called off. Anis Amri was killed during a shoot-out with police in Milan early this morning.

Markets

  • This week the S&P 500 rose by 0.29% and closed at 2,264. The Dow Jones increased by 0.46% and closed at 19,934. So far in 2016, the S&P is up 12.96% and the Dow is up 17.14%.
  • Interest rates retreated from their highs this week. The 5 year and 10 year U.S. Treasury Notes now yield 2.02% and 2.54%, respectively.
  • The spot price of WTI Crude Oil rose by 0.21% this week and closed at $53.06 per barrel. WTI Crude is up 43.25% in 2016.
  • The spot price of Gold declined 0.26% this week, closing at $1,131.88 per ounce. Year to date, gold prices are up 6.67%.

Economic Data

  • Existing home sales rose by 0.7% (mom) in November versus expectations of a 1.8% decline. Single-family home sales fell by 0.4% and sales of condos rose 10%.
  • Sales of new single-family homes increased 5.2% (mom) in November. New home sales were the highest in the Midwest and West, and lower in the South.
  • Personal income remained unchanged in November versus expectations of a slight increase. Nominal wage, salary incomes, and real disposable personal income were down 0.1% (mom). Consumer spending increased 0.2% and the personal saving rate dropped to 5.5% from 5.7%.

Fact of the Week

  • Healthcare spending in the United States reached $3.2 trillion in 2015 (18% of the nation’s economy), equal to per person spending of $9,990. 20 years earlier (1995), per person healthcare spending in America was $3,788 (source: Health Affairs).

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

Rate increase, OPEC: Wealth Economic Update Dec. 19, 2016

U.S. and World News

  • fed360In Wednesday’s Federal Open Market Committee meeting, the decision was made to increase the fed funds rate by 0.25% to a 0.50-0.75% range, as expected. What came as a surprise, however, was that the committee now sees three interest rate increases in 2017 as opposed to two. This news sent the trade-weighted Dollar and treasury yields higher for the week as expectations for quicker monetary policy tightening has arisen.
  • For the first time since 2001, OPEC and non-OPEC oil producers have signed a deal to cut oil production. Unlike OPEC deals in the recent past, the current deal led by Russia to limit oil production to 558,000 barrels per day is widely expected to be enforced and abided by. The goal by OPEC countries is to keep the price of oil within the $60 range and full compliance with the deal will likely push the price to that level. On the other hand, as a result of interest rate increases, the Dollar has strengthened which is expected to lower the demand for oil, putting pressure on oil prices.

Markets

  • This week the S&P 500 was down slightly by 0.03% and closed at 2,258. The Dow Jones increased by 0.45% and closed at 19,843. So far in 2016, the S&P is up 12.64% and the Dow is up 16.61%.
  • Interest rates continued to climb higher this week following the FOMC meeting. The 5 year and 10 year U.S. Treasury Notes now yield 2.07% and 2.59%, respectively.
  • The spot price of WTI Crude Oil increased by 0.91% this week and closed at $51.97 per barrel. WTI Crude is up 40.47% in 2016.
  • The spot price of Gold fell 2.25% this week, closing at $1,133.82 per ounce. Year to date, gold prices are up 6.85%.

Economic Data

  • Initial jobless claims came in at 254,000, a decrease from last week’s reading of 258,000. The labor department noted no major distortions to the data this week. The four week moving average for claims moved up to 258,000.
  • Retail sales rose by 0.1% (mom) in November versus consensus estimates of a 0.3% gain. Core retail sales (excluding autos, gasoline, and building materials) increased by 0.1% versus consensus estimates of a 0.3% gain.
  • The consumer price index (CPI) increased by 0.2% (mom) in November and 1.7% from one year earlier which was in line with expectations. Core CPI (excluding food and energy) increased by 0.15% (mom) and 2.1% from a year earlier which was also in line with expectations.
  • Housing starts declined by 18.7% (mom) in November after a large gain in October. The decline in housing starts for the month was largely led by multi-family starts which were down 45.1% while single-family starts fell by 4.1%. Multi-family and single-family starts were up 76% and 10.5% in October respectively.
  • The Philadelphia Fed’s manufacturing index rose to +21.5 in December from +7.6 in November which was much higher than expectations. 

Fact of the Week

  • Outstanding student loan debt is $1.279 trillion as of 9/30/16. 11.0% of student debt (by dollar) is at least 90 days delinquent or is in default as of 9/30/16. The delinquency calculation understates the actual delinquency rate since student loans that are now in deferment are treated as if they are “current” with regard to their payment status (source: Federal Reserve Bank of New York).

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

Visit Old Second Wealth Management

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

 

A Different Way of Investing

Rich Gartelmann CFP® Senior Vice President/Head of Wealth ManagementRich Gartlemann Bio Picture

More often than not, when people talk about their investments, they talk about how well they did versus “the market” or about how much they gained in a single stock. The problem with measuring performance this way is that investing really isn’t like a sporting event where you keep score against an opponent. The only way you “win” is if you have enough money to achieve your financial goals. If you don’t, it won’t matter that your portfolio beat the S&P 500 Index for 10 years straight.

Focus on Results, Not Numbers  

When asked about their goals, often people will say, “I just want to have a million dollars by the time I retire.” That is a big round number, but is it enough? Too much? It depends on the type of retirement you want and the sources of income you’ll have available to support you.

Similarly, there are many investors who start selling stocks and buying bonds when they turn 65, because they believe that when they hit this age they need to invest conservatively. It may be the right action and, depending upon the current market condition, it may not even be a conservative move. Interest rate risks and rising inflation rates can devastate bond investments at certain points in an economic cycle.

If a person turning 65 today is in good health and still enjoys working, they are probably not ready to retire. Even if they are looking forward to retiring, they need to think about how to manage their assets in a way that will support them for another 30 years.

Match the Investments to the Timeframe

The trick to financial planning really isn’t the math as much as determining the journey. Think about where you are in your life and what you want to achieve next. Then, decide what you hope to achieve after that and, from a financial standpoint, what you wish to achieve in the long term.

The list will change over time, and it’ll be different for everyone. However, it may include things like:

  • Buy a home
  • Earn a graduate degree
  • Start a business
  • Pay for my children’s education
  • Pay off my home
  • Buy a family vacation home
  • Eat out whenever I want
  • Travel more
  • See every professional sports team play a game at home
  • Afford health care expenses
  • Avoid estate taxes for my family
  • Support charitable causes
  • Retire early
  • Just keep doing what I love and not retire

To know what you need to afford what you want requires adding some details to your goals and a timeframe. From there, your advisor can work with you to set a dollar goal and calculate how much you need to save to achieve it, if it is an expense. Your advisor can also help you decide how much you need to invest and how to invest your savings to create enough income to achieve ongoing goals, like retirement.

When it comes to investing, we focus less on the big numbers and more on helping you achieve big results.

For more information on how we approach and deliver goal-driven wealth management services, visit us here or call 630-844-5730. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

OPEC, Castro: Wealth Economic Update Dec. 5, 2016

U.S. and World News

  • castro-172756369_320Oil prices rallied this week as OPEC has appeared to come to an agreement to cut production for the first time in eight years following a meeting of its member nations in Vienna this week. Prospects for a harmonious meeting were shaky early on as Saudi Arabia and Iran were initially opposed to cuts and tensions between Russia and OPEC flared up. Even with an agreement in place, questions still remain regarding the implementation and monitoring of production cuts given the cartel’s history of not always honoring these types of agreements.
  • Former President of Cuba, Fidel Castro, died at the age of 90 last week. His brother, Raul, who has been in the President of the still Communist nation since 2008, is tasked with the continuation of U.S.-Cuba relations which have softened in the last year as the U.S. embargo on the country was lifted by President Obama. President-Elect Trump has been critical of re-establishing diplomatic ties with Cuba and may be willing to reverse those policies.
  • Protests in South Korea have intensified as more than 1 million people gathered to rally against President Park Guen-hye and call for her impeachment. This was the 5th consecutive week of mass protests in Seoul. Park is embroiled in a corruption scandal that has paralyzed her government for weeks, leading her to request a shorter term from parliament and relinquishing some of her powers. Her opposition, however, believes this is a tactic to avoid impeachment and is attempting to put an impeachment motion up for vote in the coming weeks.

Markets

  • This week the S&P 500 decreased 0.91% and closed at 2,192. The Dow Jones rose 0.22% and closed at 19,170. So far in 2016, the S&P is up 9.31% and the Dow is up 12.65%.
  • Interest rates paused from the dramatic increase they have seen in recent weeks. The 5 year and 10 year U.S. Treasury Notes now yield 1.82% and 2.38%, respectively.
  • The spot price of WTI Crude Oil spiked 12.20% this week on reports of an agreement by OPEC to cut production. Oil closed at $51.68 per barrel. WTI Crude is up 29.04% in 2016.
  • The spot price of Gold fell 0.52% this week, closing at $1,177.43 per ounce. Year to date, gold prices are up 10.96%.

Economic Data

  • Initial jobless claims came in at 268,000, an increase from last week’s reading of 251,000. The claims figure may have been higher this reading due to the Thanksgiving holiday last week. The four week moving average for claims moved up to 252,000.
  • The monthly employment report for November showed job gains of 178,000, slightly lower than consensus estimates of 180,000. The prior two months’ employment numbers were revised down a combined 2,000 jobs, bringing the three month average for job gains to 176,000.
    • The headline unemployment rate fell 0.3% to a new cyclical low of 4.6%, lower than estimates of 4.9%. Part of this decline in the unemployment rate can be explained by a 0.1% decline in the labor force participation rate to 62.7%.
    • The wage component of the report was disappointing as average hourly earnings declined 0.1%, compared to expectations of a 0.2% increase. Year-over-year wage growth is now down to 2.5%.
  • The Case-Shiller home price index rose 0.4% for September, in line with expectations. Prices rose in all 20 cities that are part of the index. Home prices have now risen 5.1% over the last 12 months.
  • The PCE price index (measure of inflation) rose by 0.2% in October, in line with expectations. Headline prices as measured by the PCE index have now risen 1.4% over the last 12 months.
    • Core PCE (excludes food and energy, Fed’s preferred inflation measure) rose by 0.1% in October, also in line with consensus. Core PCE prices have now risen 1.7% over the last 12 months, still a bit below the Fed’s 2% target.

Fact of the Week

  • The national homeownership rate in the U.S. as of September 30th was 63.5%. This is down from the peak level of 69.2% seen on 12/31/2004. Every 1% reduction in the homeownership rate represents 1.2 million households that have changed from homeownership to renter status. (Source: Census Bureau)

Please contact a member of the Wealth Management Department if you have any questions about this information.

Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves, CFA® – (630) 801-2217 – smeves@oldsecond.com
Jean Van Keppel CFA® – (630) 906-5489 jvankeppel@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Joel Binder, SVP – (630) 844-6767 jbinder@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz, VP – (630) 906-5467 ejgorenz@oldsecond.com

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