Interest rates increased again in March, after going up in December. Fed chair Janet Yellen indicated that they may increase rates several more times this year. Rate increases are good for savers who have been suffering with little interest on their savings, although it may take some time before seeing the benefit. A series of rate increases may be good for those homeowners who are selling, especially early in the upswing of an increasing interest rate cycle, as buyers scurry to lock in rates before they increase again. Rates are still near historic lows, yet if rates do continue to increase, today’s rates may be the best for the foreseeable future. Interest rate increases hurt borrowers as the cost of loans increase, especially for homeowners with adjustable rate mortgages and those with credit card debt. Best bets: pay off credit card debt and lock in a fixed-rate mortgage.
Tempted to borrow from your 401(k) to pay off your bills from Christmas gifts or a winter get-away? Think twice about that. You’ll will pay yourself back with after-tax dollars, which, when you take distributions later in life, you’ll pay tax again on those same dollars. You’ll also be on the hook to pay back the full amount if you leave your job for any reason. Best to save for extras beforehand, then you can really enjoy your splurges worry-free.
Recently, the Fed increased interest rates for only the 2nd time in over 10 years. It was a modest ¼ point, and in December the Fed again issued guidance that they will likely raise rates several times next year, which is essentially the same message we received from the Fed in December of 2015. This time may be different though– consumer sentiment reached a peak in December and small business optimism jumped 38%, to its highest point since 2004. Hopefully, the economy will see faster growth in the coming year and beyond.
The post-election market rally surprised many, especially with its tenacity. Some experts see the imminent change in Washington as good for business, while others see the change as harmful for the middle class. Like with every new president, we hope for changes that bring improvements for most people. We don’t know how much of the new administration’s agenda will be implemented, or how the agenda itself may change in the coming months. We will be watching for a bipartisan approach to major legislation, which we view as the key to changes with staying power.
Nationwide, home values hit highs recently, topping their past record 10 years ago, although this doesn’t include the effects of inflation. Still, this is progress and many millennials may be eager to purchase their own homes before price and interest rate increases make buying prohibitively expensive. When looking at homes, review the property tax bill to see what the assessor valued the property. Be aware that paying substantially more than the assessed value could very well mean an increase in your property taxes in the not-too-distant future!
The National Association of Personal Financial Advisors (NAPFA) is an organization of fee-only, fiduciary financial advisors. Until recently we were Chicago-area leaders, bringing advisors together for continuing education and networking. As NAPFA members, we take the following fiduciary oath:
The advisor shall exercise his/her best efforts to act in good faith and in the best interests of the client.
The advisor shall provide written disclosure to the client prior to the engagement of the advisor, and thereafter throughout the term of the engagement, of any conflicts of interest, which will or reasonably may compromise the impartiality or independence of the advisor.
The advisor, or any party in which the advisor has a financial interest, does not receive any compensation or other remuneration that is contingent on any client’s purchase or sale of a financial product.
The advisor does not receive a fee or other compensation from another party based on the referral of a client or the client’s business.
Following the NAPFA Fiduciary Oath means I shall:
* Always act in good faith and with candor.
* Be proactive in disclosing any conflicts of interest that may impact a client.
* Not accept any referral fees or compensation contingent upon the purchase or sale of a financial product.
Nest Builder Financial Advisors, Ltd. is hosting a complimentary educational workshop on the individual healthcare insurance market. There is a lot of confusion in this area and Ester Viti of The Viti Companies will help clarify how the individual insurance, Obamacare, the exchange -www.healthcare.gov- and subsidies work.
This session will be especially helpful if you – or someone close to you – falls into one of the following categories:
- Divorced or widowed, losing spousal employer coverage
- Small business owner/self-employed
- Early retiree without employer-sponsored insurance
- Between jobs/COBRA
- One spouse on Medicare, younger spouse needs insurance
The event will begin at 7:15 PM at the University Center of Lake County in Grayslake
Please email Mary@NestBuilderFinancial.com to reserve a seat.