This week it almost feels like the return of winter. But it’s hard to feel too down about the cold temperatures. On Monday, my wife and I got our second vaccines. Our three sons have gotten their first. Only our daughter has not started this process as she is too young. We can soon have a chance to experience at least some aspects of pre-pandemic life that we have been missing.
Clients frequently ask about emergency funds. They want to know how much to hold in such accounts. Conventional wisdom says you should hold three-to-six months of normal living expenses in such accounts. The other question relates to how to invest your emergency funds. Interest rates are low, making people reluctant to hold cash in a bank account. But the last thing you want to see is for your account to decline in value just when you need it. This week’s first article discusses emergency funds in more detail.
Despite this week’s weak returns, the S&P 500 Index is having a solid April. As of Thursday’s close, the S&P is up 4.1% month-to-date and 10.1% year-to-date.
The market fell Thursday amid reports that capital gains taxes could increase for those with income exceeding $1 million. The market has had its ups and downs lately as investors evaluate corporate earnings reports and upcoming economic data reports. They are also waiting for commentary from the Federal Reserve about interest rates.
As we have said before, we know of nobody that can consistently predict market returns. Over the long term, we expect the market to move higher. Anyone that invests in the market is expressing this belief. There would be no reason to invest if you didn’t expect market gains over time. That does not mean the market’s direction will always be up. We can expect market corrections and bear markets in the future. They are par for the course. But we don’t know when they will occur. Against this backdrop, we continue to stick to our process and remain focused on the long term.
Here are the links to this week’s articles as well as a brief description of each:
1. How to Set and Invest Your Emergency Fund. How Many Months’ Worth of Spending Do You Need in Your Emergency Fund? These two articles address two of the most common questions I get about emergency funds.
· “How much should be in my emergency fund?”
· “How should I invest it?”
According to the rule of thumb, your emergency fund should cover three-to-six months of your essential monthly living expenses. In general, your emergency fund should not be considered a source of extra income. You want to invest it where you can access it easily, too. These factors mean the best place for such funds is usually a bank or money market account.
2. Here’s the Tiny-Yet Brilliant-‘Short Email’ Rule One Web Designer Created to Manage His Overflowing Inbox Problem. Do you have an overflowing email inbox? Does managing your inbox drive your workday? This blog shares an interesting suggestion. Limit the length of your emails to five sentences. You can find the explanation here.
3. Post-COVID Retirement Challenges for Women and How to Fix Them. When it comes to securing a safe retirement, women face specific obstacles. The COVID pandemic and related economic upheaval have made these challenges even greater. What steps can women take to prepare for retirement?
· Become comfortable with the idea of investing earlier.
· Make sure their portfolio reflects both their risk tolerance and their goals for retirement.
· Contribute to their retirement plan, including taking full advantage of any matching contributions.
· Have a family conversation about caregiving and develop a logical plan to address it.
4. The Shortness of Time. We often criticize people for wasting money. But we see others – and ourselves – throwing away another precious resource – time – every day. The truth is we want to spend our money to buy more time. We want others to do the things we don’t want to do. This article shares four ways we misunderstand time.
5. Money Can’t Buy Happiness: 4 Secrets to a Happy Retirement. While they say money can’t buy happiness, you can still do things to impact your happiness in retirement. It starts with proper planning. If you have a proper plan outlining how your money can work for you, you can have a happier retirement.
· Set your goals.
· Make healthcare a priority.
· Take care of your family.
· Find your purpose.
These factors are an important element of the financial plans Apprise completes for its clients. If you would like some help with your financial plan, please schedule a free, no obligation Strategy Session.
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We hope you find the above posts valuable. If you would like to talk to us about financial topics including your investments, creating a financial plan, saving for college, or saving for retirement, please complete our contact form. We will be in touch. You can also schedule a call or a virtual meeting via Zoom.
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Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.