blog1.jpg

What Is Up with Inflation?

  • Souders Financial Group

If you have been tuning into financial news or reading the Wall Street Journal lately, you may have noticed the word “inflation” appearing quite often in the past few months. The long period of low interest rates and the influx of stimulus has investors anticipating that inflation may be inevitable. We hope to help you understand what inflation is and how it affects you and your financial plan: Inflation, put simply, is the decline of purchasing power in a currency over time. Inflation is a key component to the Time Value of Money concept that “a dollar today is worth more than a dollar tomorrow”. Economists measure inflation in many different ways, but the most tangible to our everyday lives is the Consumer Price Index (CPI). CPI is a basket of goods and services that the Federal Reserve and US Bureau of Labor monitors for price fluctuations over time. The chart below illustrates CPI inflation over time. After experiencing hyper-inflation in the 1980’s, CPI has declined and has been relatively low for the past decade.

There are over 200 items monitored in CPI, but they can be broken up into 8 major groups (food and beverages, housing, apparel, transportation, medical care, entertainment, education, and other goods and services). The chart below is from JP Morgan’s Guide to Retirement and it depicts the average annual inflation by spending category

In our financial plans, inflation is an important consideration when planning for a future financial goal. Using an average inflation rate in planning can tell us what we think we must earn on our investment in order to keep up with the value of a dollar today. The return we achieve above inflation is called real return.

In a low interest rate environment, where the 10-year treasury has been hovering well below the average inflation rate, investors have had to get creative with earning real return on their investments. Inflation has historically been detrimental for bond markets and has had mixed impacts for stock market returns. However, fixed income will likely still provide stability to portfolios in difficult market environments. Sticking with the most appropriate asset class allocation in order to achieve long-term goals is still the primary challenge for investors today.

The bottom line is that investors should remain patient and disciplined as the market adjusts to the economic recovery. Maintaining a proper portfolio mix to achieve long-term financial goals should continue to be the main focus.

blog1.jpg

Market Update: 10/1/2020

  • Souders Financial Group

The third quarter of 2020 continued right where the second quarter left off with a continued upswing in the S&P 500 in both July (+5.51%) and August (+7.01%). The market's largest headline included a 4-1 stock split by Apple (AAPL) and a continued rally in the technology sector. September was a month riddled with volatility and finished down (-3.9%) as the market saw a mixture of Coronavirus-related headlines and suspected profit taking causing some rather large down days. The S&P 500 finished up 8.5% for the quarter and is up 4.1% YTD.

Continue reading

blog1.jpg

CARES Act: What is it and how might it impact you?

  • Souders Financial Group

Last week, the United States Congress passed, and President Trump signed, the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The CARES Act is a $2 Trillion emergency fiscal stimulus package that aims to bridge and ease the effects of the Coronavirus on the US Economy. The bill has provisions for loans, payments and tax credits aimed at helping individuals, businesses, and municipalities meet short-term cashflow needs. While the bill is hundreds of pages in length, here are a few things we believe our clients should be aware of.

Continue reading

blog1.jpg

A Lesson From History

  • Souders Financial Group

With COVID-19 cases surging in some states and uncertainty abound, sometimes it can be best to take a look at the past to guide investor's moving forward. Throughout history, there have always been reasons to not invest. The chart below includes a World War, the Great Depression, multiple other expensive and traumatic military conflicts, a dozen or so recessions and the current global pandemic. However, $1,000 invested in the S&P 500 in 1928 would be worth $169,428 today which would give an investor an annualized 6% compound return before dividends .

Continue reading

blog1.jpg

Why the Economy is Stable Despite the Public Health Emergency

  • Souders Financial Group

The stock market continues to react to coronavirus headlines on a daily basis - with both negative and positive market swings. As the death toll rises (primarily in China at the moment), the fact that this is a human tragedy and not just an economic or financial one should not be diminished.

Continue reading

blog1.jpg

Market Update: 6/1/2020

  • Souders Financial Group

After a sharp rebound in April, off of the March lows, May continued to show strength in a stock market rally as the S&P 500 was up 4.5% month over month. May's rally was largely fueled by the positive news of progressing vaccine trials and hopes for a fast-tracked vaccine, which could be available by the end of 2020 in a best-case scenario. This news coupled with the reopening of many states' economies fueled optimism that the US economy is bottoming and starting recover from a deep decline in economic activity.

Continue reading

blog1.jpg

SECURE Act: What is it and how might it impact you?

  • Souders Financial Group

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which passed the House in a sweeping 417-3 vote, was incorporated into an end-of-year spending bill and was signed by President Trump on December 20, 2019. This legislation was a bipartisan effort and puts into place numerous provisions that are intended to enhance retirement security. The act itself contains 29 separate provisions, but we will highlight some of the key changes and discuss how this may impact your financial plan.

Continue reading

  • 1
  • 2
For informational purposes only. Not intended as legal, tax, or investment advice, or a recommendation of any particular security or strategy. Please contact your legal or tax professional for more information regarding your individual circumstances. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in the above commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. Past performance is not indicative of future results. For more information about Souders Financial Advisors, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov or contact us at 513-598-2400.