Kevin Kroskey's Money & Mind

If you watched the Republican presidential debates, you might have noticed that a number of  candidates yearn for a return to the gold standard—that is, that every dollar issued by the government would be backed by a comparable value in gold bars that were stashed away in a government vault. Sen. Ted Cruz of Texas argued that the dollar should have a fixed value in gold, and Sen. Rand Paul of Kentucky added that printing money without backing in the precious metal destroys the value of our currency. Mike Huckabee, former governor of Arkansas, thinks that if not gold, then the dollar could be pegged to a basket of commodities. All are mostly concerned that printing money will cause runaway inflation.   But there may be several problems with this return to the fiscal system of the late 1800s and early 1900s. One is that inflation has barely budged even as the Federal Reserve Board was piling one QE stimulus on top of another, and the government was adding records amounts of currency

While many market participants wait for the "inevitable" rise in short-term interest rates expected when the Federal Reserve tightens its monetary policy, some investors may have missed the increase in short-term rates already underway as a result of market forces.    Looking at the zero- to two-year segment of the yield curve—the segment that many believe will be most affected whenever the Fed "normalizes interest rates"—it may be surprising to see how much rates have increased since 2013.   In fact, the yield on the 2-Year US Treasury note has nearly doubled since the beginning of 2015, rising from 0.45% in January to almost 0.90% today.* The yield on the 1-Year US Treasury note has more than tripled, from 0.15% to more than 0.50% over the same period. The 6-Month US Treasury bill’s yield rose from a low of 0.03% in May to over 0.30% today. Yet, despite the higher rates, we have not experienced the conjectured financial storm in the fixed income market. 

Few words characterize today’s financial markets like uncertainty. When overseas economic issues can rob investors of months of gains and speeches by Federal Reserve officials cause markets to flip-flop unpredictably, investors are left wondering what they should do. In an attempt to make major market movements work for their portfolios rather than against, some investors attempt to time the market. Market timing is the strategy of trying to predict future market movements to time buying and selling decisions. When markets are rallying or pulling back, it can be very tempting to try to seek out the top to sell or the bottom to buy. The problem is that investors usually guess wrong, missing out on the best market days or months. The last few months has been volatile. The S&P 500 goes down -6.0% in August, another -2.5% in September, but bounces back +8.4%in October. If you hit the eject button at the end of September, you lost out! Missing out on the market’s top-performing d

A new map released by the Tax Foundation shows exactly how far $100 would go in all 50 states. Using recently released data from the Bureau of Economic Analysis, the Tax Foundation was able to show how the varying prices of goods, housing and income taxes in each state can impact consumers’ purchasing power. Southerners and Midwesterners have a serious edge over those along the East and West Coasts. A hundred bucks goes the furthest in Mississippi, where $100 will buy you what would cost $115.74 in another state that's closer to the national average. The next low-price states are Arkansas, Missouri, and Alabama. Ohio comes in at an encouraging $112.11 Meanwhile, $100 would only be worth $84.60 in the District of Columbia, the priciest state, $85.32 in Hawaii and $86.66 in New York. http://finance.yahoo.com/news/how-much--100-is-worth-in-your-state-152310027.html Click the Map Read More

If you don't already read Jason Zweig's regular column in the Wall Street Journal, you should. He is one of the few financial journalists worth reading. His recent article on the psychology of the recent market drop is rational and instructive. ==== Click here to read the article in it's entirety: http://blogs.wsj.com/moneybeat/2015/08/24/the-cruel-psychology-of-the-1000-point-drop/ See below for a snippet: Experiments have shown , for instance, that people believe cancer is riskier when they are told that it kills “1,286 out of 10,000 people” than when they hear that it kills “24.14 out of 100 people.” Hearing “1,286” immediately brings a large number of victims to mind, while “24.14” is simply a much smaller number. To notice that the first number is less than 13%, while the second is more than 24%, you have to focus on the denominators of the fractions and do some quick division. But your emotions will likely hijack your brain long before you get to that poi

The value of delaying Social Security has been written about a lot recently. In the current low-yield environment for bonds and low expected return environment for many stock asset classes, it is a particularly attractive strategy now. But should retirees include Social Security as part of their bond allocation? Watch the short video to learn one expert's perspective.  

With all the recent shark attacks in the news, I was reminded of an article published on Bloomberg relating investment risk to the frequency of large predator kills. They are quite a rare occurrence, but we tend to perceive them and the associated risk as being much more prevalent. This misperception also has much to do with risks when it comes to investing. With shark attacks, Greece, Puerto Rico, etc. in the headlines take a few minutes and read the article linked below. Remember what risk truly and is not and focus on what you can control. http://www.bloombergview.com/articles/2014-05-21/what-kills-you-and-your-investments

It seems that the wealthier you are, the greater your chances of financially helping your adult children. Pew Research Center data compiled in late 2014 revealed that 38% of American parents had given financial assistance to their grown children in the past 12 months, including 73% of higher-income parents. 1      The latest Bank of America/USA Today Better Money Habits Millennial Report shows that 22% of 30- to 34-year-olds get financial help from their moms and dads. Twenty percent of married or cohabiting millennials receive such help as well. 2    Do these households feel burdened? According to the Pew survey, the answer is no. 89% of parents who had helped their grown children financially said it was emotionally rewarding to do so. Just 30% said it was stressful. 1   Other surveys paint a different picture.    Earlier this year, the financial research firm Hearts & Wallets presented a poll of 5,500 U.S. households headed by baby boomers. The major finding: boo

Motivational speaker Denis Waitley once remarked, “You must stick to your conviction, but be ready to abandon your assumptions.” That statement certainly applies to retirement planning. Your effort must not waver, yet you must also examine it from time to time. 1       Perhaps you may realize that you under-estimated your health insurance costs and will need more retirement income than previously assumed. Or perhaps, with today's low interest rates you are not getting the level of investment returns you counted on. With those factors and others in mind, here are some signs that you may need to double-check your retirement strategy.     Your portfolio lacks significant diversification. Many baby boomers are approaching retirement with portfolios heavily weighted in U.S. equities. As many of them will have long retirements and a sustained need for growth investing, you could argue that this is entirely appropriate. Yet, U.S. equities by some measures may be over-valued by

What does it take to be a “one percenter?” How much do you have to earn before you fall into this rarified zone? A new study written by socioeconomists Estelle Sommeiller and Mark Price, looked at state-level tax data from the Internal Revenue Service over the past 35 years. They’ve created a chart which looks at annual income at the threshold of the top 1% in each U.S. state. If you live in Ohio you’re a “one percenter” if you earn more than $316,000 a year.  The top state is Connecticut at more than $678,000 a year…higher than New York’s threshold of $506,000, the $539,000 threshold in New Jersey, $555,000 in Washington, D.C. or $532,000 in Massachusetts. California ($438,000) and Texas ($423,000), which are considered wealthy states, actually came in behind North Dakota ($502,000). States with the lowest threshold include West Virginia ($243,000), Kentucky and Alabama ($263,000) and Maine ($274,000).   Nationwide, the total share of income going to the upper 1%

On March 3rd, the Ohio 529 Board announced changes to the college savings program fund lineup. The Board announced, "Based on extensive research, Dimensional was recommended because it offers relatively low-cost options and has many products that are ranked highly by OTTA’s investment consultant, Wilshire Associates, Inc." This is great news for Ohio 529 plan participants. Dimensional Funds have a strong, empirical underpinning and have long been a core component of the True Wealth Design investment portfolios. For participants that well-utilize their funds, this should help provide more dollars on a tax-free basis for qualified higher education expenses. To Your Prosperity, Kevin Kroskey, CFP® MBA   Click here for the full news release  from the Ohio 529 Board.   Click here for  cover story from Baron's “A Different Dimension” for more information on Dimensional Funds and what makes them different. Selected highlights are below: DIMENSIO

Yet another study showing how poorly prognosticators do. There's too much noise in the markets in the short run to have any forecasting methodology with reliable predictive ability. And if there were such a methodology, why would anyone share it rather than make huge profits for themselves?   - Kevin Kroskey, CFP, MBA   Gurus Achieve An Astounding 47.4% Accuracy ( From Forbes.com )   "After tracking 68 experts and 6,582 market forecasts, CXO Advisory Group has concluded that the average market prediction offered by experts has been below 50% accuracy.   The results are in and they are bad. After tracking 68 experts and 6,582 market forecasts, CXO Advisory Group has concluded that the average market prediction offered by experts has been below 50% accuracy. Flip a coin and your odds for predicting the market are better. It’s hard to imagine that the average market expert isn’t able to at least match the track record of a coin flip, but it’s true. Figure 1

Should you rely on “will power” to bequeath assets? The more complex your estate, the more ill-advised that choice becomes. Having only a will in place when you die may not be enough. As MarketWatch noted recently, research from the Williams Group (a major estate planning firm) indicates that estate fights reduce inherited wealth for as many of 70% of families. 1   Inheritance is no simple matter. In a simpler world, an individual with a $3 million estate could pass away and simply leave $1 million each to his or her children – enough said, over and done. But life isn’t so simple: one heir may deserve more money as a result of a disability or fate dealing out hardships, while another may truthfully deserve less due to his or her behavior, or his or her financial success.    If you feel one heir should receive more of your estate than another, that wish needs to be articulated in your estate planning. Stating these wishes before you pass away (the why, the how, the how much)