Economic Updates & Financial Articles

Economic Updates & Financial Articles

Economic Updates:

Financial Articles:

 


Weekly Economic Update for 4/15/2024

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Stocks fell last week as investors sorted through conflicting inflation reports and assessed geopolitical tensions.

Inflation Spooks Markets

On Wednesday, the March Consumer Price Index (CPI) report rattled markets, revealing that inflation accelerated slightly more than expected. Bond yields rose, and stocks retreated in response, as investors feared the news could influence the Fed’s rate decision. The 10-year Treasury yield had its highest intraday jump in three years.1,2,3

Markets rallied Thursday as investors were encouraged by the Producer Price Index (PPI) report, which measures inflation at the producer level. Unlike CPI, PPI rose less than expected, which sparked a tech-focused rally. Markets opened lower on Friday as investors wrestled with the conflicting inflation reports.

Fears of an escalating Middle East conflict also weighed on stocks during the week. Concerns about a potential weekend event led some investors to end the week in a risk-off position.4

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Intellectual Property Rocks in a New Digital Era

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How will your IP work for you in your retirement and beyond?

In 2023, the music industry witnessed a groundbreaking shift, as iconic bands like ABBA, KISS, and the Beatles embraced the digital frontier. These legendary acts showcased new digitally created content, with ABBA and KISS debuting live shows featuring their digital avatars. While this development opens up exciting possibilities for entertainment, it also raises questions about intellectual property (IP) ownership and its implications for ordinary people and their estates.

The Beatles’ so-called “final release” was a single called “Now and Then” based on a demo cassette created by John Lennon, who was tragically slain in 1980. While most of us won’t have a posthumous hit single, it’s not rare for deceased authors to have their unpublished—or even unfinished—novels see success in print and film. Famous examples include The Girl with the Dragon Tattoo by Stieg Larsson and Dragon Bones by Michael Crichton. Retired athletes have played again (at least in video games), and aging or passed actors have appeared as their younger selves in films. Another scenario might be for those who hold a patent that didn’t go into mass production during their lifetime, only to become incredibly profitable later. Here’s the big takeaway: Your IP might be more valuable than you realize, so consider consulting a legal professional who can offer guidance.

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Tax Rules When Selling Your Home

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How the gains from the sale of a primary residence are taxed has changed in recent years. If you have recently sold your home or are considering doing so, you may want to be aware of these new rules.

Home Sale

If you owned and lived in your home for two of the last five years before the sale, then up to $250,000 of profit may be exempt from federal income taxes. If you are married and file a joint return, then it doubles to $500,000.1

To qualify for this exemption, you cannot have excluded the gain on the sale of another home within two years of this sale. Please consult a professional with tax expertise regarding your individual situation.2

This profit would be excluded from your taxable income. In fact, the sale may not need to be reported unless you receive a Form 1099-S or do not meet the above requirements.

If you sold your home at a loss, unfortunately, you can't deduct the loss.

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Weekly Economic Update for 4/8/2024

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Stocks dropped last week as investors focused on “what's next” for interest rates after mixed comments from multiple Fed officials.

Fed Officials Weigh In

Stocks struggled out of the gate again last week, ending Monday and Tuesday in the red on concerns that recent economic data could derail the Fed’s plan for short-term rates.

The markets recovered Wednesday through Thursday morning when weekly jobless claims were better than expected. But stocks fell broadly Thursday afternoon following mixed comments from multiple Fed officials. All three averages ended the day down more than 1 percent for the first time in a month.1,2

On Friday, a strong jobs report gave investors much-needed confidence. The U.S. economy created 303,000 jobs in March—higher than economists’ expectations—while unemployment dropped slightly to 3.8 percent. Markets rallied after the news, but not enough to recoup all weekly losses.3

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When Should You Take Social Security

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The Social Security program allows you to start receiving benefits as soon as you reach age 62. The question is, should you?

Monthly payments differ substantially depending on when you start receiving benefits. The longer you wait (up to age 70), the larger each monthly check will be. The sooner you start receiving benefits, the smaller the check.

From the Social Security Administration’s point of view, it’s simple: if a person lives to the average life expectancy, the person will eventually receive roughly the same amount in lifetime benefits, no matter when they choose to start receiving them. In actual practice, it’s not quite that straightforward, but the principle holds.

The key phrase is “if the person lives to average life expectancy.” If a person exceeds the average life expectancy and has opted to wait to receive benefits, they will start to accumulate more from Social Security.

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How to Make the Tax Code Work for You

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By May 15, 2023, over 142 million taxpayers had dutifully filed their federal income tax returns. And they all made decisions about deductions and credits – whether or not they realized it.1

When you take the time to learn more about how it works, you may be able to put the tax code to work for you. A good place to start is with two important tax concepts: credits and deductions.

Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.

Please consult legal or tax professionals for specific information regarding your individual situation.

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Weekly Economic Update for 4/1/2024

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Stocks were narrowly higher for the week as investors digested mixed economic news about consumer confidence. All three of the major averages posted gains for Q1 2024.

Stocks Finish Strong

Markets slipped for the first half of the four-day week as investors took a breather after the prior week's gain. Conflicting economic news on Monday and Tuesday contributed to the slide. New home sales in February slipped 0.3 percent over the prior month but increased by 5.9 percent from the prior year. Durable goods orders—everything from washing machines to helicopters—rebounded 1.4 percent in February, beating expectations and recouping some of January’s 6.9 percent drop.1,2,3

Stocks rallied on Wednesday, including a fresh record close for the Standard & Poor’s 500. An upward revision to consumer sentiment on Thursday helped the rally along. The markets are closed on Friday when the much-anticipated inflation report called the Personal Consumption and Expenditures (PCE) is released, which could set up a volatile Monday.4

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Fixed or Variable Mortgage, Which Should You Pick?

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Buying a home is the single-largest financial commitment most people ever make. And sorting through mortgages involves a lot of critical choices. One of these is choosing between a fixed or variable interest rate mortgage.

True to its name, fixed-rate mortgage interest is “fixed” throughout the life of the loan. In contrast, the interest rate on a variable-interest rate loan can change over time. The mortgage interest rate charged by a variable loan is usually based on an index, which means payments could move up or down, depending on prevailing interest rates.1

Fixed-rate mortgages have advantages and disadvantages. For example, rates and payments remain constant despite the interest rate climate. But fixed-rate loans generally have higher initial interest rates than variable-rate mortgages; the financial institution may charge more because if rates go higher, it may lose out.

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What Is a 1031 Exchange?

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If you want to add investment real estate to your portfolio, you may want to know what a 1031 Exchange is. While the rules and regulations for this tactic can get complicated, understanding the basic concepts may help you decide if this strategy is right for you.

Conducting a 1031 Exchange involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional familiar with the rules and regulations. Also, this article is for informational purposes only. It is not a replacement for real-life advice, so consult your tax or accounting professional before moving forward with a 1031 Exchange.

Here’s what a 1031 Exchange is and some requirements to help you determine if you should pursue this avenue further.

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Weekly Economic Update for 3/25/2024

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Stocks posted their best week of the year, sparked by news that the dovish Fed decided to keep rates steady and signaled three rate cuts were still possible this year.

Stocks Bounce Back

As widely expected, the Fed left rates unchanged at the conclusion of its two-day meeting. But somewhat less expected, the Fed signaled its inclination to cut interest rates three times this year—each time by a quarter percentage point. That was a positive surprise for some, who worried that recent hot inflation reports would cause the Fed to reconsider its stance.1

Markets pushed higher Wednesday following the news, with all three averages closing at record highs. The rally continued through Thursday, boosted further by news that existing home sales rose 9.5 percent in February.2,3

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Estimating the Cost of College

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It doesn’t take a degree in finance to see that the cost of college continues to rise.

In its 2023 report, the College Board showed that in-state tuition and fees at private non-profit four-year institutions increased by 5% in inflation-adjusted dollars between the 2013-14 and 2023-24 school years.1

For many families, the lion’s share of education costs falls on the parents and, in some cases, the grandparents. Families rely on a combination of scholarships, grants, financial aid, part-time jobs, and parental contributions to help cover the cost. There are also a number of resources that can help individuals prepare for college, such as the College Board website and the government student aid website.

If your child is approaching college age, a good first step is estimating the potential costs. The accompanying chart can help you get a better idea about the cost of college.

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Exploring the Federal Student Grant Program

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You may have heard of the Free Application for Federal Student Aid, or FAFSA, if you or someone you know has plans to attend a college, career school, or university. Last year, over 50% of high school seniors submitted a FAFSA to the Department of Education to secure financial assistance. But what many prospective and current students may overlook are the various federal grants awarded to students in need each year.1

Granted value

Most federal grants, unlike loans, function as sources of funding. There are some exceptions, though. For example, if a student is awarded a grant, but withdraws from the program in which they’re enrolled, they may be required to pay back all or a portion of that grant.2

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Weekly Economic Update for 3/18/2024

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Stocks fell for the second straight week on inflation concerns despite a report on consumer prices that was initially well received by investors.

Stocks Slide

Tuesday was the only bright spot during the week as stock prices rose after the Labor Department report showed the Consumer Price Index rose 3.2% in February compared with a year earlier. It was a bit warmer than economists expected but cooler than investors feared. The news sparked a day-long rally, with the Standard & Poor’s 500 stock index setting its 17th record high of the year.1,2

Following Tuesday, caution lingered as investors parsed the underlying data behind headline consumer inflation numbers. Thursday's fresh producer price index (PPI) report showed that wholesale prices increased by 0.6% in February, more than the expected 0.3% increase. Additionally, core PPI (excluding food and energy) was hotter than expected. 

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All Muni Bonds Are Not Created Equal

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The city of Detroit emerged from bankruptcy in 2014. Still, its previous inability to pay investors left some questioning their long-held assumption about the relative safety of municipal bonds. Without question, in the wake of Detroit’s troubles, gaining a better understanding of municipal bonds makes more sense than ever.1

At their most basic level, there are two types of municipal bonds:2

  1. General obligation bonds, which are a promise by the issuer to levy taxes sufficient to make full and timely payments to investors.
  2. Revenue bonds, which are bonds whose interest and principal are backed by the revenues of the project that the bonds are funding.

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U.S. Personal Savings Rate

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The U.S. personal saving rate stood at 3.7 percent at the end of 2023, up from the 3.4 rate at the end of 2022. The personal saving rate is the federal government’s estimate of what percent of their incomes U.S. households are saving. But market watchers and economists are mixed on what can be learned from swings in the saving rate.1

Why Economists Struggle

They struggle with the personal saving rate because it’s a derivative number – that is, it’s not measured directly. Instead, the Bureau of Economic Analysis derives the saving rate from other estimates. Here’s how it’s calculated:2

  1. The Bureau of Economic Analysis subtracts payroll and income taxes from personal income to get disposable personal income.
  2. The Bureau then subtracts its estimate of personal outlays, which include expenditures, interest payments, and payments, from disposable personal income to get an estimate of personal savings.
  3. The personal saving rate is calculated by dividing personal income by personal savings.

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Weekly Economic Update for 3/11/2024

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Stocks were down for the week as investors appeared to take some profits and traders parsed Fed Chair Jerome Powell’s Congressional testimony.

Markets Wobble 

Stocks had a rough start to the week, with the Dow, S&P 500, and Nasdaq each off more than one percent on Tuesday alone. Mega-cap tech stocks were under pressure as investors appeared to take some profits.

Markets clawed back much of their losses on Wednesday and Thursday, with the Fed Chair’s upbeat comments to the Senate Banking Committee boosting stocks. Chair Powell said that once the Fed was confident inflation was tracking “sustainably at 2%,” the Fed would consider cutting short-term interest rates. The S&P 500 and Nasdaq rallied, with the S&P hitting a record close.1,2,3

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How Will the Economy React to AI?

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Artificial intelligence (AI) tools are already invading every aspect of our lives. Debates are ongoing about how it will infiltrate individual industries. Governments are working to understand AI and determine how to regulate something that affects much more than the digital space. Its potential uses are being realized everywhere, from musicians turning 50-year-old demo recordings into fully realized hit singles to firms analyzing data to increase productivity, maximize security, and even develop new medicines. The potential for AI is a fast-moving beast, with new tools emerging so quickly that they sometimes make existing ones obsolete just months after they become available.

It has certainly made many people nervous. An online educator surveyed 800 executives about their futures with AI. Almost half of the respondents believed that many of the job skills vital to the employees of various industries, including C-suite executives, may be irrelevant in just two years.1,2

This is some scary talk, to be certain. However, it is important to note that such change is inevitable. Just as the telephone put the telegraph out to pasture and the commercialization of the Internet changed how every company does business, AI will change things. However, not all aspects of the change will be bad or negative.

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Can Group, Private Disability Policies Work Together?

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According to the Social Security Administration, a 20-year-old has more than a 25% chance of becoming disabled before reaching retirement age.1

Loss of income for such a duration has the potential to cause significant financial hardship. And while Social Security Disability Insurance may help, it’s critical to understand that about two-thirds of initial applications are denied and the average SSDI payment is only $1,534 a month.2,3

Disability coverage may be available through your employer, who may pay all or a portion of the cost for your coverage.

Employer plans typically pay up to 50% to 60% of your income. This limited coverage might not be enough to meet your bills, which is why you may want to supplement employer-based coverage with a personal policy. Supplemental policies may be purchased to cover up to about 70% of your income.4

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Weekly Economic Update for 3/4/2024

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Stocks extended their tech-led advance last week as signs of a resilient and still-enthusiastic consumer boosted momentum.

Nasdaq Sets New High

Stocks traded in a narrow band early in the week but ended the five-trading sessions with a powerful advance.

While the Dow dipped lower, artificial intelligence (AI) names powered the gains in the S&P 500 and the Nasdaq Composite. The Nasdaq bobbed around the 16,000 level for most of the week before posting consecutive record highs on Thursday and Friday, surpassing its 2021 record. It was the last of the three major stock benchmarks to reach a record high this year.1

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Grantor Retained Annuity Trusts (GRATs)

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Suppose your financial objectives include income and leaving a legacy for your heirs. In that case, it's essential to work with a financial professional familiar with your many options, including older tools.

Grantor retained annuity trusts (GRATs) gained popularity in 2000 after a favorable ruling by the U.S. Tax Court toward a wealthy family in the retail business. This ruling allowed for zeroed-out GRATs, for which annuity payments return the original assets to the grantor, leaving only the appreciated value for the beneficiaries. You don't need to be a billionaire to take advantage of a GRAT, which has potential for individuals and families of many income levels.

A GRAT is a financial tool used to reduce taxes on large financial gifts to family members. It involves creating an irrevocable trust for a specific period, transferring assets into the trust, and paying an annuity to the grantor each year. When the trust expires and the final annuity payment is made, the beneficiary receives the assets with minimal or no gift taxes. GRATs can be a valuable tool for transferring wealth while minimizing gift tax liability. They allow the grantor to move asset appreciation to the remaining beneficiaries, reducing the value of the grantor's assets subject to estate tax. A GRAT is established for a specific number of years.

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4 Steps to Protecting a Child with Disabilities

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Raising a child is expensive and can cost over a quarter of a million dollars, excluding college. For a child with special needs, that cost can more than triple. If you’re the parent of a child with special needs, it’s vital to ensure your child will continue to be provided for after you’re gone. It can be difficult to contemplate, but with patience, love, and perseverance, a long-term strategy may be attainable.1,2

Envisioning a Life After You
Just as every child with special needs is unique, so too are the challenges families face when preparing for the long term. Think about the potential needs of your child. Will they require daily custodial care? Ongoing medical treatments? Will your child live alone or in a group home? Can family members assume some of the care? Answers to these and other questions can help form the vision of what may need to be done to plan for your child’s care.

Preparing Your Estate
Without proper preparation, your child’s lifetime needs can quickly outstrip your funds. One resource is government benefits, such as Supplemental Security Income (SSI) and Medicaid, which your child may qualify for depending on their situation. Because such government programs have low-asset thresholds for qualification, you may want to consider whether to make property transfers to your child with special needs.

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Weekly Economic Update for 2/26/2024

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Stocks vaulted to new heights last week on the back of an artificial intelligence (AI) semiconductor company, marking investors’ belief that AI has the potential to transform the U.S. economy.

Stocks Rally To Record Highs

Stocks traded in a fairly tight range for the first half of the short week, yawning at the lack of economic data while awaiting earnings results from one key company that creates chips that power the artificial intelligence operations of many firms.

A strong Q4 corporate report and long-term message from Nvidia Corp. pushed the S&P 500 and Nasdaq to new closing highs on Thursday.

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Eight Mistakes That Can Upend Your Retirement

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Pursuing your retirement dreams is challenging enough without making some common, and very avoidable, mistakes. Here are eight big mistakes to steer clear of, if possible.

No Strategy: Yes, the biggest mistake is having no strategy at all. Without a strategy, you may have no goals, leaving you no way of knowing how you’ll get there—and if you’ve even arrived. Creating a strategy may increase your potential for success, both before and after retirement.

Frequent Trading: Chasing “hot” investments often leads to despair. Create an asset allocation strategy that is properly diversified to reflect your objectives, risk tolerance, and time horizon; then make adjustments based on changes in your personal situation, not due to market ups and downs.1

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Your Emergency Fund: How Much Is Enough?

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Have you ever had one of those months? The water heater stops heating, the dishwasher stops washing, and your family ends up on a first-name basis with the nurse at urgent care. Then, as you’re driving to work, you see smoke coming from under your hood.

Bad things happen to the best of us, and sometimes it seems like they come in waves. That’s when an emergency cash fund can come in handy.

One survey found that over two in three Americans are not confident that they have enough emergency savings to cover a month's worth of expenses. Another survey found that 43% of Americans said they wouldn’t be able to cover an unexpected $1,000 expense with money from their savings account.1,2

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Weekly Economic Update for 2/19/2024

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THE WEEK ON WALL STREET

Stocks fell last week as investors reacted to disappointing inflation updates and other economic reports that fell short of estimates.

Stocks Snap Winning Streak

Markets were quiet Monday but opened lower Tuesday in response to the January inflation report that showed higher-than-expected consumer prices. But stocks regained some momentum on Wednesday and rallied Thursday despite disappointing reports on both retail sales and industrial production for January.1,2

News of higher-than-expected wholesale prices on Friday put investors back on edge and kept stocks from ending the week on a positive note. The weekly loss broke a five-week winning streak.3

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Getting a Head Start on College Savings

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One study estimates the average cost of raising a child to the age of 17 for a middle-income family is about $310,605. As a point of comparison, the median home price in the U.S. was $417,700 at the end of 2023.1,2

If you want to add the cost of education to that number, you can expect to be paying an additional $24,030 a year for the cost of a public four-year in-state university.3

But before you throw your hands up in the air and send junior out looking for a job, you might consider a few strategies to help you prepare for the cost of higher education.

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A Taxing Story: Capital Gains and Losses

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Chris Rock once remarked, “You don’t pay taxes – they take taxes.” That applies not only to income but also to capital gains.

Capital gains result when an individual sells an investment for an amount greater than their purchase price. Capital gains are categorized as short-term gains (a gain realized on an asset held one year or less) or long-term gains (a gain realized on an asset held longer than one year).

Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

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Weekly Economic Update for 2/12/2024

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THE WEEK ON WALL STREET

The stock market experienced solid gains last week, concluding the trading week on a positive note, thanks to robust corporate reports and favorable inflation news; this propelled the S&P 500 Index to achieve a new record high at the end of the week.

S&P Tops 5,000

At the start of last week's trading, stocks faced downward pressure due to comments by Fed Chair Powell over the weekend, signaling that the Federal Reserve had no immediate plans to initiate interest rate cuts. Consequently, the yield on the two-year U.S. Treasury note, highly influenced by monetary policy, increased to its highest level in two months.1

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What Is a 1035 Exchange?

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According to the most recent information available, Americans have individual life insurance with a total face value of $14 trillion.1

Due to a variety of factors, these individuals may find themselves in circumstances where the specific life insurance policy or annuity contract they own does not suit their needs. They may want to exchange products without incurring a taxable event.2

That’s where Section 1035 of the Internal Revenue Code comes in. A 1035 exchange provides a means for exchanging an annuity contract or life insurance policy without being treated as if it had been surrendered or sold. Keep in mind that a 1035 exchange can be used only when it involves the same contract or policyholder and the same type of product.3

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Three Key Questions to Answer Before Taking Social Security

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Social Security is a critical component of the retirement financial strategy for many Americans, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.

When to Start?
You have the choice of 1) starting benefits at age 62, 2) claiming them at your full retirement age, or 3) delaying payments until age 70. If you claim early, you can expect to receive a monthly benefit that will be lower than what you would have earned at full retirement. If you wait until age 70, you can expect to receive an even higher monthly benefit than you would have received if you had begun taking payments at your full retirement age. The decision of when to begin taking benefits may hinge on whether you need the income now or can wait, and whether you think your lifespan will be shorter or longer than the average American.

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Weekly Economic Update for 2/5/2024

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THE WEEK ON WALL STREET

Stocks pushed higher last week as investors cheered mega-cap tech corporate reports and a better-than-expected employment report.

Stocks at New Highs

At the beginning of the week, stocks surged, anticipating fourth-quarter corporate updates from tech companies and the Federal Reserve's two-day policy meeting; this led to the S&P 500 Index reaching a new record high on Monday.

The market remained relatively stable for the rest of the week until Wednesday, when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The Federal Open Market Committee's (FOMC) news unsettled investors, who anticipated that rates would remain unchanged but expected more specific guidance on the Fed's plan to lower interest rates.1

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Five Most Overlooked Tax Deductions

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Who among us wants to pay the IRS more taxes than we have to?

While few may raise their hands, Americans regularly overpay because they fail to take tax deductions for which they are eligible. Let’s take a quick look at the five most overlooked opportunities to manage your tax bill.

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Important Birthdays Over 50

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Most children stop being "and-a-half" somewhere around age 12. Kids add "and-a-half" to make sure everyone knows they're closer to the next age than the last.

When you are older, "and-a-half" birthdays start making a comeback. In fact, starting at age 50, several birthdays and "half-birthdays" are critical to understand because they have implications regarding your retirement income.

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Weekly Economic Update for 1/29/2024

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THE WEEK ON WALL STREET

Stocks continued their upward climb last week as excitement around big tech continued; positive economic reports stoked investors’ belief that the Federal Reserve has pulled off a soft landing.

Stocks Power Ahead

Big tech was back last week, pushing the Dow and the S&P 500 to new highs early in the week as markets resumed the late Q4 rally.

The so-called “Magnificent Seven” stocks—comprising 28% of the S&P 500 Index—resumed their pole position at the head of the pack as investors maintained their artificial intelligence (AI)-related bullishness and rewarded widespread cost-cutting at many tech giants. While the rally fizzled on Friday, the week’s gains were slow but steady.1,2,3

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Roth IRA for Kids

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Small business owners may find it challenging to find ways to provide additional benefits to their children who work for the company. One often overlooked choice is including a Roth individual retirement account (IRA) as part of their compensation, a strategy that offers the potential to benefit both the children and the business.

Small businesses play a significant role in labor markets. They employ 61.7 million Americans, 46.4 percent of all private-sector employees. Over the period from 1995 to the present, small businesses have been responsible for generating 17.3 million net new jobs, which accounts for an impressive 62.7 percent of all jobs created since 1995.1

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Weekly Economic Update for 1/22/2024

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THE WEEK ON WALL STREET

Stocks finished higher last week, with big tech again leading amid lingering uncertainty over how continued economic strength would influence the Fed’s rate decision.

Stocks Dip, Then Rally 

Stock prices dropped early in the week before rising to new highs as the week ended. The four-day trading week began with more Q4 bank earnings, which disappointed. The news pushed the financial sector and the broader S&P 500 Index lower on Tuesday. The yield on the 10-year Treasury climbed after a Fed Governor said the central bank may not adjust rates as much as markets expect. That and a stronger-than-expected holiday retail sales report put pressure on stock prices.1,2,3

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Retiring Wild: National Parks and You

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For many older adults, finding time to experience nature can be one of the greatest pleasures in retirement. And what better place to take in America's splendor than one of our over 400 National Park Service sites? For over a century, generations of retirees have explored these stunning landscapes, marveled at the diverse wildlife, and discovered the physical benefits of a retirement spent in the great outdoors. But recent research suggests that the mental benefits could be even more important for retirees. Read on to learn more.1

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Essential Financial Figures | 2024

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Stay organized and informed with this printable, newly updated resource of essential financial figures and dates.

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Weekly Economic Update for 1/15/2024

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THE WEEK ON WALL STREET

Stocks pushed higher last week, led by big tech names and boosted by December inflation reports that were mixed but positive enough to shore up investor confidence in Fed rate cuts this year.

Stocks Rock And Roll

It was a rocky week that ended on a high note. Stocks rallied Monday after the prior week's decline. Tech shares led, with the Nasdaq posting its best day since November 14.

On Tuesday, stocks initially tumbled but recovered most of their losses late in the session. Stocks rallied on Wednesday ahead of inflation news the following two trading days. Stocks fell initially on Thursday in response to a hotter-than-expected inflation report, reflecting investor concerns about the certainty, timing, and extent of Fed rate cuts later this year.

On Friday, the start of earnings season brought mixed results from a handful of major banks. By close, stocks had recovered most of their losses, ending the week with solid gains.1,2,3,4,5

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Managing an Inheritance

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Inheriting wealth can be a burden and a blessing. Even if you have an inclination that a family member may remember you in their last will and testament, there are many facets to the process of inheritance that you may not have considered. Here are some things you may want to keep in mind if it comes to pass.

Keep in mind this article is for informational purposes only and is not a replacement for real-life advice, so consider speaking with a legal or tax professional before making any decisions with an inheritance.

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Stop Wasting Money

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Benjamin Franklin once said, “a penny saved is a penny earned.” One way to find the money to meet your spending or saving needs is to examine your current spending habits and consider eliminating money wasters.

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Weekly Economic Update for 1/8/2024

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THE WEEK ON WALL STREET

Stocks retreated in the first trading week of 2024, struggling a bit after a celebratory end to last year as investors second-guessed Fed signals and fretted over lingering inflation concerns.

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The Financial Literacy Crisis

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Imagine driving a car without a basic understanding of the rules of the road or even how to operate it. Scary thought.

Here’s another scary circumstance – one that is all too real. Many Americans are making financial decisions with minimal financial knowledge of investing, budgeting, and credit. The TIAA Institute conducted a survey on U.S. financial literacy, asking 28 basic questions about retirement savings, debt management, budgeting, and other financial matters. The average respondent answered only about half of the questions correctly.1

Another recent survey conducted by the Census Bureau found that almost 40% of Americans say that it has been somewhat or very difficult to pay for usual household expenses in the last seven days.2

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Making a Charitable Contribution

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Why sell shares when you can gift them? If you have appreciated stocks in your portfolio, you might want to consider donating those shares to charity rather than selling them.

Donating appreciated securities to a tax-qualified charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.1

Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. Make sure to consult your tax and legal professionals before modifying your gift-giving strategy.

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Weekly Economic Update for 1/1/2024

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THE WEEK ON WALL STREET

Stocks posted a slight gain last week amid a shortage of news and light holiday trading.

The Dow Jones Industrial Average gained 0.76%, while the Standard & Poor’s 500 added 0.49%. The Nasdaq Composite index advanced 0.32% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, increased 1.13%.1,2,3

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What Is a Roth 401(k)?

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While many people are familiar with the benefits of traditional 401(k) plans, others are not as acquainted with Roth 401(k)s.

Since January 1, 2006, employers have been allowed to offer workers access to Roth 401(k) plans. And starting in 2023, retirement rules were updated to allow more retirement plans the ability to offer Roth contributions.1,2

As the name implies, Roth 401(k) plans combine features of 401(k) plans with those of a Roth IRA.3,4

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When Life Insurance Becomes Taxable

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In 1900, the average life expectancy of a newborn was only 32 years old. By 2021, that number more than doubled to 71 years, and the trend is expected to continue.1

Living this long may have unexpected tax consequences. Here’s why.

Many older life insurance policies mature at a specific age, typically 95 or 100. If the insured individual attains that age, the policy’s cash value may be paid out to the policy owner in lieu of a death benefit payment.2

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Weekly Economic Update for 12/25/2023

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THE WEEK ON WALL STREET

Investor optimism and fears of missing out on future gains propelled stocks higher in the last full week of trading before year-end.

The Dow Jones Industrial Average added 0.22%, while the Standard & Poor’s 500 gained 0.75%. The Nasdaq Composite index advanced 1.21% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.51%.1,2,3

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Weekly Economic Update for 12/18/2023

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THE WEEK ON WALL STREET

Markets reacted positively last week to cooler inflation and the idea of potential rate cuts next year, adding to the gains of the market’s year-end rally.

The Dow Jones Industrial Average rose 2.92%, while the Standard & Poor’s 500 gained 2.50%. The Nasdaq Composite index picked up 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.75%.1,2,3

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How Boomers and Millennials Differ

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We are in the midst of an unprecedented transfer of wealth, with trillions of dollars being moved from one generation to the next. This transfer challenges many commonly held notions as new values and interests become more prominent. In short, the economy is changing, and while some of these new practices might raise an eyebrow or two, not all of these ideas are without merit.

For someone from the boomer generation, it might be easy to become upset with or confused by millennials' differing points of view. However, taking note of the differences between the two generations can foster better communication and understanding.

The younger generations, including millennials, Gen Z, zoomers, and whatever else you call them, have a different perspective on wealth than their forebears. As these generations reach middle age, an interesting trend has emerged in emphasizing YOLO (You Only Live Once). Now that these generations have the steering wheel, they seem to be stepping on the gas and running full force into exciting, once-in-a-lifetime experiences.

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White Elephant Inheritance

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Have you ever had to deal with a "white elephant"? Not the actual pachyderm, but what Merriam-Webster calls "a property requiring much care and expense yielding little profit" or, more simply, "something of little or no value." Of course, we're not talking about the sort of "white elephants" you might get in a humorous gift exchange over the holidays, like a tacky t-shirt that isn't even your size or an inexplicable kitchen gadget.

Not everyone has a rich uncle who will present them with a simple cash gift in his will. A "white elephant" is a gift that may cause more issues than it resolves, much as an elephant might eat an unwitting recipient out of house and home. It's an asset that comes to you via gift or inheritance and needs to be quickly sold, liquidated, or transferred to avoid further expenses of time or money. In such cases, it is crucial to understand how to disclaim an inheritance properly and avoid holding the burden. The average American household stands to inherit $46,200. Not all those bequeathments are straight cash, and some might prove inconvenient or troublesome.1

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Weekly Economic Update for 12/11/2023

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THE WEEK ON WALL STREET

A late-week, two-day rally left stocks higher, adding to November’s gains as the last month of trading for 2023 began.

The Dow Jones Industrial Average was flat (+0.01%), while the Standard & Poor’s 500 gained 0.21%. The Nasdaq Composite index advanced 0.69% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was up 0.37%.1,2,3

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Do Your Kids Know The Value Of A Silver Spoon?

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You taught them how to read and how to ride a bike, but have you taught your children how to manage money?

The average debt for student borrowers is $40,499. And nearly 11% of new graduates will default within the first twelve months of repayment.1,2

For current college kids, it may be too late to avoid learning about debt the hard way. But if you still have children at home, save them (and yourself) some heartache by teaching them the basics of smart money management.

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Four Steps to Valuing an Estate

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Determining the value of an estate is a fundamental first step in estate management and a critical requirement for settling a decedent’s estate.1

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Weekly Economic Update for 12/4/2023

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THE WEEK ON WALL STREET

A Friday rally turned an otherwise mixed week for stocks into a solid performance.

The Dow Jones Industrial Average picked up 2.42%, while the Standard & Poor’s 500 gained 0.77%. The Nasdaq Composite index rose 0.38% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, ended marginally higher by 0.13%.1,2,3

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What If Your Kids Decide Against College?

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As a parent or grandparent, you may have diligently saved money in a 529 account to help fund your child's or grandchild's college education. But what happens if they decide college isn't the right path for them? It's a valid question that many families are facing as more and more people choose alternatives to traditional four-year colleges.

It's a more common situation than you might think. Fewer students are going to college, and the expenses continue to climb. American undergraduate enrollment rates peaked in 2010 and have steadily declined since. During the same period, college costs have risen over 12 percent.1,2,3,4

A 529 plan is a college savings plan that allows individuals to save for college on a tax-advantaged basis. The state tax treatment of 529 accounts is only one factor to consider before committing to this savings plan. You should also consider any fees and expenses associated with a particular plan. Whether or not a state tax deduction is available will depend on your state of residence. State tax laws and treatment may vary, and state tax laws may differ from federal tax laws. Earnings on nonqualified distributions will be subject to income tax and a 10 percent federal penalty tax.

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Find That Lost Retirement Account

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Do you have a long-lost retirement account left with a former employer? Maybe it’s been so long that you can’t even remember. With over 24 million “forgotten” 401(k) accounts holding roughly $1.35 trillion in assets, even the most organized professional may be surprised to learn that they have unclaimed “found” money.1

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Weekly Economic Update for 11/27/2023

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THE WEEK ON WALL STREET

Investor enthusiasm for stocks remained strong last week, buoyed by declining bond yields in a holiday-abbreviated trading week.

The Dow Jones Industrial Average picked up 1.27%, while the Standard & Poor’s 500 gained 1.00%. The Nasdaq Composite index rose 0.89% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was flat (+0.03%).1,2,3

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Financial Strategies for Women

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Nearly 60% of women take sole responsibility for making investment decisions, yet only 19% of women feel very confident in their ability to fully retire with a comfortable lifestyle.1,2

Although more women are providing for their families, when it comes to preparing for retirement, they may be leaving their future to chance.

"Female investors thrive and often outperform their male counterparts."

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Making a Charitable Gift

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Why sell shares when you can gift them? If you have appreciated stocks in your portfolio, you might want to consider donating those shares to charity rather than selling them.

Donating appreciated securities to a tax-qualified charity may allow you to manage your taxes and benefit the charity. If you have held the stock for more than a year, you may be able to deduct from your taxes the fair market value of the stock in the year that you donate. If the charity is tax-exempt, it may not face capital gains tax on the stock if it sells it in the future.1

Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. Make sure to consult your tax and legal professionals before modifying your gift-giving strategy.

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Weekly Economic Update for 11/20/2023

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THE WEEK ON WALL STREET

Stocks extended their November rally last week as investors cheered lower-than-forecast inflation data.

The Dow Jones Industrial Average gained 1.94%, while the Standard & Poor’s 500 added 2.24%. The Nasdaq Composite index rose 2.37% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, increased 3.36%.1,2,3

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Should I Accept a Free Credit Lock?

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In today's increasingly connected world, protecting your information is arguably more important than ever. Your credit report consists of a slew of personal details, such as your financial activity, credit accounts, loans, and payment history. Because of the importance of your credit report, credit bureaus such as Equifax, Experian, and TransUnion offer credit locks to help protect consumers in the event of identity theft or fraud.

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Weekly Economic Update for 11/13/2023

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THE WEEK ON WALL STREET

A powerful Friday rally left stocks higher last week, extending the market’s early November gains.

The Dow Jones Industrial Average rose 0.65%, while the Standard & Poor’s 500 advanced 1.31%. The Nasdaq Composite index jumped 2.37% higher for the week. The MSCI EAFE index, which tracks developed overseas stock markets, edged 0.25% higher.1,2,3

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The Lowdown on Those Free Credit Scores

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The Fair and Accurate Credit Transaction Act of 2003 provided individuals with valuable rights to the credit information companies keep on them, but did you know that the credit score provided to you may be different than the one provided to lenders?

The first thing you should know is that you have a right to see your credit report once annually without cost. You can find free credit reports online. The report will contain important information that may affect your credit score.

While your credit report can be obtained for free, your credit score will cost you money, except in the case where you have been denied a loan on the basis of your credit score, in which case you may obtain your credit score for free. However, many banks and lenders are now providing their customers with free monthly credit score updates.

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Keep Your Umbrella Handy

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In 2021, the U.S. had a record 24.5 million millionaires, up from 20.2 million in the previous year. An increase in personal wealth may bring greater financial flexibility; it may also bring greater liability. Individuals with high net worth, or those who are perceived to have high net worth, may be more likely to be sued. And personal injury claims can cost millions.1

Umbrella liability insurance is designed to put an extra layer of protection between your assets and a potential lawsuit. It provides coverage over and above existing automobile and homeowners insurance limits.

For example, imagine your teenage son borrows your car and gets in an accident, seriously injuring the other driver. The accident results in a lawsuit and a $1 million judgment against you. If your car insurance policy has a liability limit of $500,000, that much should be covered. If you have additional umbrella liability coverage, your policy can be designed to kick in and cover the rest. Without umbrella coverage, you may be responsible for paying out of pocket for the other $500,000, which could mean liquidating assets, losing the equity in your home, or even having your wages garnished.

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Weekly Economic Update for 11/6/2023

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THE WEEK ON WALL STREET

Stocks ripped higher last week on a dramatic retreat in bond yields triggered by easing inflation and a slowing labor market.

The Dow Jones Industrial Average jumped 5.07%, while the Standard & Poor’s 500 surged 5.85%. The Nasdaq Composite index rocketed 6.61% higher for the week. The MSCI EAFE index, which tracks developed overseas stock markets, gained 3.12%.1,2,3

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A Brief Guide To Condo Insurance

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The ownership structure of a condominium unit is different from that of a single family house. Here’s what you need to know when purchasing insurance for your condo.1

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