October 2021 Newsletter

October, 2021

An Ugly Week

The reality of a more hawkish Fed finally hit the bond market last week, sparking a sell-off in bonds that sent yields higher. Higher yields hurt technology and other high-growth companies, and that weakness spread to the broader market. (Higher yields can reduce the value of a company's future cash flow, which may reset valuations.)

Congress added to the market uncertainty. It was unable to advance an infrastructure bill, however, it was able to agree on a short-term debt ceiling increase. After a sell-off to close out September, stocks surged at the end of last week on news of a potential Covid-19 oral therapeutic, an easing of yields, and reports that President Biden was traveling to Capitol Hill to help break the logjam on legislation. Some of that market volatility carried into this week, ultimately with the week ending on a positive uptick.

Powell in the News

Fed Chair Jerome Powell was at the center of two news developments last week. The first was the announcement by a prominent senator opposing Powell’s renomination, heightening market uncertainty over the leadership transition when his term expires in February 2022.1

Powell later made comments at a European Central Bank event, admitting that the current bout of inflation may last longer than he and many other central bankers have previously expected. But he remained steadfast that inflation would be transitory, attributing much of today's price pressures to temporary supply bottlenecks. Powell also said that he saw little evidence of building inflationary expectations from consumers or businesses.2

Fallout from the Chinese Property Market

There’s a famous saying about a hurricane starting from a butterfly flapping its wings on the other side of the world. That “butterfly effect” is certainly happening in terms of the Chinese property market’s influence on financial markets around the world.

For America, the concern contributed to the worst single day for the S&P 500 since May of this year. With building on a decline in China, the effect is felt in related industries in the U.S., such as construction equipment and investment firms.3

This tumult is not the only area of concern in the Chinese economy. Chinese President Xi Jinping is enacting policies throughout the year designed to give the government greater control over private enterprise. For many, this is seen as curbing decades of economic growth and a genuine game-changer for a world economy accustomed to a more permissive Chinese economy.3

Still, it’s important to remember that regulatory behavior around the world, no matter how strict, is one of the many factors considered by your trusted financial professional. In addition to regulatory risks, international markets have differences in financial reporting standards, currency exchange rates, political risk, and foreign taxes.

Women and Financial Strategies

Forty-four percent of American women are the primary breadwinner in their house.4 Yet only 10% of women feel very confident in their ability to fully retire with a comfortable lifestyle.5

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

Women and College

The reason behind this disparity doesn't seem to be a lack of education or independence. Today, women are more likely to go to college and graduate than men.6 So what keeps them from taking charge of their long-term financial picture?

One reason may be a lack of confidence. In one recent study, less than half of the more than 2,000 women surveyed said they felt satisfied with their knowledge of finances.7 Women may shy away from discussing money because they don’t want to appear uneducated or naïve and hesitate to ask questions as a result.

Insider language

Since Wall Street traditionally has been a male-dominated field, women whose expertise lies in other areas may feel uneasy amidst complex calculations and long-term financial projections. Just the jargon of personal finance can be intimidating: 401(k), 403(b), fixed, variable.8 To someone inexperienced in the field of personal finance, it may seem like an entirely different language.

But women need to keep one eye looking toward retirement since they may live longer and could potentially face higher health-care expenses than men.

If you have left your long-term financial strategy to chance, now is the time to pick up the reins and retake control. Consider talking with a financial professional about your goals and ambitions for retirement. Don’t be afraid to ask for clarification if the conversation turns to something unfamiliar. No one was born knowing the ins-and-outs of compound interest, but it’s important to understand in order to make informed decisions.

Compound Interest: What’s the Hype?

Compound interest may be one of the greatest secrets of smart investing. And time is the key to making the most of it. If you invested $250,000 in an account earning 6%, at the end of 20 years your account would be worth $801,784. However, if you waited 10 years, then started your investment program, you would end up with only $447,712.

Compound Interest Chart With Alarm Clock

This is a hypothetical example used for illustrative purposes only. It does not represent any specific investment or combination of investments.

Tips and tricks to cut down on impulse spending

Even the most financially disciplined of us can fall victim to a well-timed advertisement or buy something in the moment that we later regret. Besides the obvious cost of the items themselves, those impulse purchases might be holding us back from living the life we really want.

Here are 5 Tips to be more intentional about your purchases and reach your financial goals faster!

#1 - Create a Goals-Based Budget:

As much as you might want that sparkly new gadget or cozy fall sweater in the moment, keep your long-term financial goals front-of-mind. In fact, writing down those goals in a place you can see them will make you more likely to stick to them. Whether it's paying off student loans, a family trip to Disneyland, or an early retirement, your big goals are worth saving for!

#2 – Compartmentalize Your Cash:

Keep more of your money in an account earmarked for your goals and leave less money readily available in a checking account meant for monthly spending. Only make purchases on a card that will pull from that checking account so you can be mindful of your purchases.

#3 – Slow Down:

Before submitting that order, take a moment to inventory your mental and emotional state. Are you stressed? Feeling blue? Oftentimes impulse purchases have less to do with that item we just can't live without and more about satisfying a deeper need. If you think your mood might be motivating your purchase, leave the item in your online shopping cart for 24 hours to see if you are still excited about it tomorrow.

#4 – Opt-Out From Temptation:

Go ahead and unsubscribe from all of those marketing emails and answer the age-old question, "If the sale happens and I don't get an email about it, does it even exist?"

#5 – Set Up Barriers to Buying:

Take your saved credit card information off your phone so that every online purchase at least requires a walk to your wallet to decide if it is really worth it.

This information is summarized from an article on CNBC.com, September 16, 2021.

Water - The Essence of Life

The human body is about 60% water. It makes up a good proportion of our brain, blood, heart, muscles, and even exists within our bones so it should come as no surprise that it is a necessary component for the performance of every bodily system.9

Water helps us regulate our body temperature, heart rate, and blood pressure. Staying well hydrated promotes a healthy metabolism and can even help you eat healthier. Water lubricates our joints, and keeps our skin looking radiant.10

Without it, we experience headaches, muscle cramps, dizziness, digestion issues, and in extreme cases of dehydration, the body shuts down all together. Even a 1% decrease in total body water content can negatively affect our cognitive ability and mood.11

We probably don't need to convince you of the reasons why it's important to drink up, but historically, research suggests that nearly half of all Americans do not consume enough water.10

How much is "enough"?

According to the Mayo Clinic, men should try to take in about 15.5 cups of water per day and women should aim for 11.5 cups.12 Obviously that number would vary based on your height, weight, activity level, and type of environment you live in but it is certainly safe to set you hydration goals high. Another great indicator for success is whether you need to make a trip to the restroom every 2-4 hours and if your urine is a lighter color.

What about alternatives to water?

When keeping track of your hydration, yes, your morning coffee, meals (particularly fresh produce!), and even an evening glass of wine can count towards that total. Just remember that some forms of hydration carry with them added sugar or other substances, so your best bet is to aim for that majority of your water intake to come from the real deal, water.10

Volunteering for Mental Health

If you take a moment to think about the last kind thing you did for another person, it should come as no surprise to hear that volunteering is perhaps just as good for your mental health as it is good for the cause you are serving, here's a few reasons why:

  1. The "Helper's High" - Neuroscientists have found that generous behaviors activate the rewards part of your brain, releasing feel-good neurotransmitters that will leave you with a sense of "elation, exhilaration and increased energy, then a period of calm and serenity." This type of high can last for several weeks, and even just thinking about a previous good deed can make those good feelings return.13
  2. Purpose and Meaning - People who volunteer report having a greater sense of life purpose and satisfaction, increased self-confidence, and a greater sense of identity. Helping others helps you see how you fit in the bigger picture of the world around you and that you matter!14
  3. More Than Just A Feeling - The positive emotional state that comes from volunteering is accompanied by positive changes in the body's immune function, lower levels of stress hormones, and even increased longevity.13
  4. Enjoyable Aging - Volunteering may reduce the onset of cognitive decline and is related to lower rates of depression and loneliness.14

Now that you're undoubtedly convinced that you want to find a volunteer opportunity of your own, consider these questions -

  1. Do I want something that aligns with my professional skillset or something that challenges me in new ways?
  2. Would I prefer to volunteer in person or remotely?
  3. Can I commit to a recurring, long-term opportunity or am I better suited for one-time engagements as my schedule allows?

However you answer these questions remember there are so many different ways to volunteer - whether it's the traditional "show up and help out", e-volunteering where you might connect with the elderly or tutor a student, or even 'voluntourism' where you can see a different part of the world, meet new people, and make a positive difference - there is something out there for everyone.

“We make a living by what we get, but we make a life by what we give.”

-Winston Churchill

Footnotes and Sources

1. CNBC.com, September 28, 2021

2. APNews.com, September 29, 2021

3. WSJ.com, September 20, 2021

4. CNBC.com, January 19, 2017

5. TransAmericaCenter.org, 2017

6. The Atlantic, August 8, 2017

7. Time.com, February 12, 2018

8. Distributions from 401(k), 403(b), and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

9. USGS.gov, October, 2021

10. EverydayHealth.com, August 25, 2020

11. WaterLogic.com, August 10, 2016

12. MayoClinicHealthSystem.org, July 22, 2020

13. ScienceDirect.com, November 2018

14. WebMD.com, 2020

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