Archive for the ‘Economy’ Category

Positive Market News

Thursday, August 27th, 2009

In the latest issue of The Lange Report, we finally had a chance to share some positive market news. In fact, the second quarter of the year turned out to be the first positive quarter in a year.

Continuing the upturn, the market also had a great July. The S&P 500 reached its low on March 9, 2009 closing at 676.53.  On August 3, 2009, it closed at 1002.63.  This is a return of 48.2% off the March 9th bottom.  The second quarter performance of the S&P 500 - an increase of 15.9% for the quarter - was its best quarterly performance in over 10 years.

Even though the market is still well off the highs that we experienced in 2008, the latest market news is certainly promising.  Many of our clients continue to ask what’s going to happen to the market in the next 3 to 6 months or even in the next year.  The truth is - we don’t know.  Nobody knows.

However, it is interesting to take a look at historical trends.  From 1926 (before the depression) to the second quarter of 2009, the S&P 500 Index has generated an average annual return of 9.6% (compared to government bonds which have averaged 5.5%).  Let’s say that you invested $1 in 1926.  If you had invested in government bonds, you would have roughly $100 today.  If you had invested in the S&P 500 Index, you would have roughly $2,000 today.

Of course, individual circumstances play a critical role in determining what asset allocation is appropriate for you.  At Lange Financial Group we continue to be believers in well diversified portfolios with some representation in most asset categories.

If you’d like to take a look at a more detailed analysis of the latest market figures as well as other economic indicators including international markets, emerging markets, interest rate changes and unemployment figures - it’s all available in the latest edition of The Lange Report.  For a copy, please contact the office at 1-800-387-1129 or sign up for our e-mails on the home page of this website.

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Posted in Economy, Financial Markets, S&P 500 Index | No Comments »

Turning Children Into Financially Responsible Adults

Friday, July 31st, 2009

A huge thanks to Neale S. Godfrey, best-selling author and founder of The Children’s Financial Network, for sharing her incredible ideas for raising financially responsible children on the July 29th edition of The Lange Money Hour. Neale was a great guest — full of tips for parents and grandparents on how to make sure that children are financially fluent.

A couple of her strategies are particularly timely given the economy and the time of the year.  For instance, many parents and grandparents are busy doing back-to-school shopping right now and we all know that shopping with tweens and teens can get ugly.  Neale offered a practical solution to avoid arguments and overspending.  For kids age eleven and up, Neale suggests giving them a budget and letting them make their own decisions.  You can set up a bank account or give them pre-paid debit cards, but in the end, putting them in control of their finances forces them to make budgetary choices.

The recession has also forced a lot of adult children to fly back to the nest and Neale recommends hammering out the details of the arrangement before they move back in.  How long do you expect them to stay?  What financial obligations do you want them to take care of?  Having these discussions in advance avoids problems later.  Neale even suggests taking the extra step of drawing up a lease with all of the terms defined.

In addition to setting up a trust, one of Jim Lange’s chief concerns when it comes to minors is the naming of a guardian.  Neale agreed that naming a guardian for your children is absolutely critical and she also recommends sharing the details of the arrangement with your children.

Notice, though, that the key element in all of these situations is communication — full disclosure of the family’s finances.  The problem for many families is that money is a taboo topic.  If this is the case in your family, one of Neale’s books might help.

Her #1 New York Times best-seller, Money Doesn’t Grow on Trees: A Parent’s Guide to Raising Financially Responsible Children is an excellent choice for adults and Ultimate Kids Money Book is perfect for elementary school age children.  Both are available on Neale’s website www.childrensfinancialnetwork.com.

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Posted in Economy, Recession, life insurance | No Comments »

$250 Recovery Checks

Thursday, May 14th, 2009

The check is in the mail. This time it’s coming from the federal government in the form of $250 economic recovery payments. Back in February, President Obama signed into law The American Recovery and Reinvestment Act of 2009. The idea is to jumpstart the stalled economy and save jobs by putting more than $13 billion into the hands of more than 50 million Americans.

Vice President Joe Biden said, “These are checks that will make a big difference in the lives of older Americans and people with disabilities — many of whom have been hit especially hard by the economic crisis that has swept across the country.”

So, who will be getting checks? You qualify if you receive Social Security or Supplemental Security Income (SSI) with the exception of those receiving Medicaid in care facilities. The legislation also provides for a one-time payment to Veterans Affairs (VA) and Railroad Retirement Board (RRB) beneficiaries.

If you fall into one of these categories, it’s possible that you already have your check, since the first checks were mailed on May 7th. If you haven’t received your payment yet — don’t worry. They are being sent on a staggered basis throughout the month of May.

Keep in mind that you don’t have to do anything to receive your $250 payment. Checks are being mailed automatically and will be sent separately from your regular monthly payment. The Social Security Administration is advising that you don’t contact them unless you have not received your payment by June 4, 2009.

If you still have questions about your economic recovery payment, feel free to contact one of the professionals on the Lange team. Our toll-free number is 800-387-1129. You can also get answers online at www.socialsecurity.gov/payment.

Have fun stimulating the economy!

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Posted in American Recovery & Reinvestment Act, Economy, Social Security | No Comments »

Encouraging Economic News

Wednesday, April 29th, 2009

The Lange team just received Tom Gau’s latest quarterly newsletter and, as always, it is filled with wonderful information. Tom is not only a CPA and a CFP, he is also a renowned educator. In fact, Jim Lange is headed to Chicago at the end of this week to participate in Tom’s 2-day educational boot-camp.  Unlike many other advisors, Tom has a number of encouraging things to say about the current economic situation.  Since we could all use some good news, we wanted to share — with Tom’s permission — some of the highlights of his 1st Quarter 2009 Update.

While there seems to be no end of frustrating economic news, Tom points out that we are finally starting to see some positive signs.  For starters, March’s three-week stock rally was brought on by unexpected good news from banks.  Citigroup, Bank of America and JP Morgan Chase all announced that they were profitable during the first two months of the year.  In addition, home sales rose unexpectedly in February, many companies are reducing costs and improving processes and strategies, and the U.S. and foreign governments have implemented programs to support the world economy.

Tom also notes that while the current recession has been painful in many ways, it should be regarded as part of a normal business cycle.  Business progress is never conducted in an orderly fashion.  Typically, recessions pave the way for business revivals, revivals develop into booms, booms breed crises and crises very often turn into recessions.  This is the way the business cycle has worked for generations and there is no reason to expect otherwise now.

That leads us to the big question – are we in a recession or, as some analysts suggest, a depression?  According to Tom, most economists believe that a recession becomes a depression when it stretches out for 36 months.  Therefore, we have until January 2011 before we get to that point.  On top of that, a replay of the Great Depression (1930-1941) is very unlikely thanks to many safeguards now in place that did not exist during the Depression – including deposit insurance and unemployment insurance.  It is also helpful to note that unemployment in 1933 jumped to 25% (we are currently at 8.5%).

To help bring the recession to an end before it has a chance to turn into a depression, Tom’s suggestion is to stop saving now.  That may seem like an odd piece of advice coming from a financial professional, but if an economic recovery is to actually take hold, consumers around the world will need to start spending instead of saving.

One more great piece of advice from Tom – to survive in this market, rely on logic and not your emotions.  In a chaotic market like this one, it is very easy for investors to fall into one of three traps:  searching for a miracle stock that will recoup all of their losses, making trades based on the latest news reports instead of long-term trends and being so paralyzed with fear that they don’t do anything at all.

A bit of common sense can help you avoid these traps – as can a bit of professional help. It is always important before making any financial move to seek the advice of a financial professional.  If you think the Lange team can be of service, please call the office at 1-800-387-1129.

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Posted in Economy, Recession | No Comments »