Financial Insights

HOT TOPIC: Data for Sale: Tips to Help Protect Your Private Information

On December 3, 2024, the Federal Trade Commission (FTC) announced a proposed settlement in legal action against a data broker named Mobilewalla, which was accused of using location data obtained through online advertising auctions to identify consumers by factors such as private home address and visits to health-care clinics and churches.

Making the Most of Your Credit Card

A growing number of Americans are moving towards a “cashless” society. As a result, credit cards are being used more often than ever — especially by those with higher incomes.1

It’s Complicated: Inheriting IRAs and Retirement Plans

The SECURE Act of 2019 dramatically changed the rules governing how IRA and retirement plan assets are distributed to beneficiaries. The new rules, which took effect for account owner deaths occurring in 2020 or later, are an alphabet soup of complicated requirements that could result in big tax bills for many beneficiaries.

Retroactive Social Security Benefits: A Chance to Turn Back Time

Did you know that if you postpone claiming Social Security past your full retirement age, you have the option of receiving a lump-sum payment for up to six months of benefits when you finally apply?

Eight Great Investing Quotes

Investing can be daunting, whether you are experienced or a beginner. Even if you feel confident about your investing strategy, it can be easy to lose focus or make decisions based on emotion. Here are eight quotes from successful investors, economists, and other insightful thinkers that may help provide perspective and focus for your own investing strategy.

Thinking of Selling Your Home? Don’t Be Surprised by Capital Gains Taxes

The Taxpayer Relief Act of 1997 provided homeowners who sell their principal residence an exclusion from capital gains taxes of $250,000 for single filers and $500,000 for joint filers. At that time, the average price of a new home was about $145,000, so this exclusion seemed generous and allowed more Americans to move freely from one home to another.1 Unfortunately, the exclusion was not indexed to inflation, and what seemed generous in 1997 can be restrictive in 2024.

Just Your Average Millionaire

The Federal Reserve’s Survey of Consumer Finances (conducted every three years) revealed that the average net worth of U.S. families surpassed $1 million ($1,063,700) for the first time in 2022, after increasing 42% from 2019. (A family’s net worth is the total of their financial assets minus their liabilities, or debts.) The historic rise during the 2019–2022 period was due in part to pandemic-era stimulus payments and low interest rates, which pushed up home values and stock prices. And overall, these financial gains far outpaced the losses in purchasing power caused by high inflation.

HOT TOPIC: Real Estate Commission Changes Around the Corner

In March 2024, the National Association of Realtors (NAR) reached a landmark $418 million settlement after losing an antitrust lawsuit filed by a group of home sellers. As many as 50 million people who paid commissions on homes sold in recent years could receive a small amount from the class-action settlement. The powerful industry group also agreed to change long-standing practices related to sales commissions.1

Treasury Yields Off 17-Year Highs

As the Federal Reserve raised interest rates to combat inflation, yields on U.S. Treasury securities climbed to levels not seen since before the Great Recession (see chart). Now that the Fed has begun lowering rates, yields have dropped, but they remain at relatively high levels. Considering how stubborn inflation has been, the Fed might move gradually in decreasing rates, but as they do, you can generally expect Treasury yields to decline. In the longer term, Treasuries purchased in the current higher-rate environment could offer higher yields than new issues, potentially increasing their value on the secondary market.

If You Don’t Have a Will Yet, Why Not?

A will is a fundamental estate planning document. It outlines how you wish your property to be distributed, who should handle matters related to settling your estate, and who you want to care for your children after you pass, among other things.

FAFSA for 2025-2026 School Year Opens December 1

For the second year in a row, the Free Application for Federal Student Aid, commonly known as the FAFSA, will be delayed. The FAFSA for the 2025–2026 school year will open on December 1 instead of the typical October 1 date. Last year, despite a redesigned FAFSA that was supposed to be easier to complete, families faced a perfect storm — a delayed rollout, technical glitches, and processing delays, which led to confusion and late financial aid packages from colleges. By one estimate, as of March 2024, FAFSA completions for the class of 2024 were down 40% from the prior year, with only about 27% of the class of 2024 successfully completing a FAFSA, compared to 45% for the class of 2023.1

Do You Know Your Medicare Coverage Options?

There are two ways to obtain Medicare coverage: (1) Original Medicare (Part A hospital insurance and Part B medical insurance), often combined with a Medigap supplementary policy and a Part D prescription drug plan; and (2) Medicare Advantage (Part C), which replaces Original Medicare and often includes prescription drug coverage as well as features similar to those provided by a Medigap policy.

Higher Rates Pressure Borrowers and Some Banks: Is Your Money Safe?

In March 2023, two of the largest bank failures in history alarmed savers who worried their own bank accounts could be at risk and investors who feared a wider financial crisis. To help restore confidence in the U.S. financial system, the federal government pledged to make all depositors whole and to support other banks that might face liquidity issues stemming from the rapid rise in interest rates.1

HOT TOPIC: The Fed Finally Cut Interest Rates

On September 18, 2024, the Federal Reserve’s Federal Open Market Committee (FOMC) lowered the benchmark federal funds rate one-half percentage point to a range of 4.75% to 5.0%. It was the first rate cut since the Fed raised the funds rate aggressively from March 2022 to July 2023 to help control inflation.1

Can You Put the Brakes on Rising Auto Insurance Premiums?

When your auto insurance policy renews, chances are that your premium will be going up, possibly by a lot. Rates vary by state and location, but nationwide, premiums increased more than 18% between July 2023 and July 2024.1

Do You Have Enough Life Insurance?

Your life insurance needs change as your life changes. When you are young, you may not have a need for life insurance. However, as you take on more responsibility and your family grows, your life insurance needs increase but then decrease after your children are grown.

HOT TOPIC: High Foreign Investment in the U.S. – Will It Last?

According to data from the International Monetary Fund, the United States received almost one-third of all global foreign investment from 2021 to 2023. This compares with an average of just 18% before the pandemic. The dramatic increase is even more remarkable considering widespread concern about the dominance of the U.S. dollar as a global currency.1

A Pension Strategy That May Boost Your Income

If you have a traditional pension — also called a defined benefit plan — when you retire, your plan may offer several payout options, including a qualified joint and survivor annuity (QJSA) if you are married. A QJSA is an annuity that pays a dollar amount (usually monthly) for the rest of your life, with at least 50% of that amount continuing to your spouse after your death.

What’s Your Real Return?

As an investor, you probably track the return on your investments. But it’s likely that you look at the nominal return, which is the percentage increase or decrease in the value of an investment over a given period of time, usually expressed as an annual return. To estimate actual income or growth potential in order to target financial goals — for example, a certain level of retirement income — it’s also important to consider the real return, which includes the effects of taxes and inflation.

HOT TOPIC: Should You Worry About Market Volatility?

On August 5, 2024, the S&P 500 Index dropped 3% from its previous close, the largest single-day loss in almost two years. This continued a three-week slide that saw the benchmark index — generally considered representative of the U.S. stock market — decline by 8.5%. The tech-heavy NASDAQ Composite Index dropped even further, losing 3.4% on August 5 and more than 13% over a four-week period.1

Equity REITs: Is There Room for Real Estate in Your Portfolio?

An equity real estate investment trust (REIT) uses the combined capital of many shareholders to buy and operate residential, commercial, and industrial income properties. Equity REITs of all stripes are listed on the major indexes and traded like stocks, so investors may receive a stable income derived mostly from real estate rents without having to finance and manage properties on their own. However, REIT share prices can be volatile and are sensitive to changes in interest rates.

Consumer Sentiment: Do Americans See Brighter Days Ahead?

Each month, researchers at the University of Michigan ask hundreds of consumers what they think about present market conditions, the job market, their personal finances and buying intentions, as well as the prospects for the general economy in the future. (Samples are statistically designed to be representative of all American households.) Their answers to about 50 questions are captured in the Index of Consumer Sentiment, which includes the Index of Current Economic Conditions and the Index of Consumer Expectations.

After the Loss of a Loved One, Watch Out for Scams

Scam artists often prey on those who are most vulnerable. Unfortunately, this includes individuals who have recently lost a loved one and are easily taken advantage of during their time of grief. Scammers will look for details from obituaries, funeral homes, hospitals, stolen death certificates, and social media websites to obtain personal information about a deceased individual and use it to commit fraud.

Mixing It Up: Asset Allocation and Diversification

Asset allocation and diversification are so fundamental to portfolio structure that it’s easy to lose sight of these strategic tools as you track the performance of specific securities or the dollar value of your investments. It might be worth considering how these strategies relate to each other and to the risk and potential performance of your portfolio.

Watch for These Hazards on the Road to Retirement

On the road to retirement, be on the lookout for hazards that can hamper your progress. Here are five potential risks that can slow you down.

HOT TOPIC: Dreaming of Retirement? Consider Maxing Out Your 401(k) in 2025

About 70% of U.S. private-sector workers have the option to contribute to a retirement plan such as a 401(k), 403(b), or 457(b) plan provided by an employer. Unfortunately, many of them don’t take full advantage of this tax-friendly opportunity to save for the future.1