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What Should You Do as Markets Flirt with Bears?

The standard definition of a bear market is when major U.S. stock indices, such as the S&P 500, drop by 20% or more from their peak. And 5+ months into 2022, we see NASDAQ and the smaller-cap Russell 2000 both in the grips of a bear and the DJIA and S&P 500 darting just outside … Read more

Federal Student Loan Repayment Postponed for Sixth Time

Federal Student Loan Repayment Postponed for Sixth Time On April 6, the U.S. Department of Education announced a record sixth extension for federal student loan repayment, interest, and collections, through August 31, 2022.1 The fifth payment pause was set to end on April 30, 2022. The six extensions have postponed federal student loan payments for almost … Read more

Watch Out for These Common Tax Scams

According to the Internal Revenue Service (IRS), tax scams tend to increase during tax season and/or times of crisis.1 Now that tax season is in full swing, the IRS is reminding taxpayers to use caution and avoid becoming the victim of a fraudulent tax scheme. Here are some of the most common tax scams to watch … Read more

Is the Russia-Ukraine War a Threat to the Global Economy?

Before Russia stunned the world by invading Ukraine, it was widely believed that the economic ties formed through globalization would help promote peace. But the war is testing that assumption and drawing attention to the vulnerabilities in far-flung supply chains, which were already under pressure because of the pandemic and recovery. In response to the … Read more

Help Wanted: Why Can’t Businesses Find Enough Workers?

The headline U.S. unemployment rate fell from 6.7% at the end of December 2020 to 3.9% in December 2021, marking the biggest one-year improvement in history.1 While many workers took advantage of this strong rebound in the job market, companies large and small have been struggling with labor shortages. A conspicuous lack of workers has snarled … Read more

Resources for Applying Eco-Friendly Practices in Your Finances

Investors are increasingly applying non-financial factors such as environmental concerns, social justice, and governance practices (or ESG) as part of their analysis process to identify material risks and growth opportunities. Here are some resources to better understand what this means for your investments.

Important Terms for Eco-Friendly Investing

Green investing:

Green investing refers to investing activities aligned with environmentally-friendly business practices and the conservation of natural resources. Investors can support green initiatives by buying green mutual funds, green index funds, green ETFs, green bonds, or by holding stock in environmentally-friendly companies.

Socially responsible investing (SRI)

Socially responsible investing (SRI) is an investing strategy that aims to generate both social change and financial returns for an investor. Socially responsible investments can include companies making a positive sustainable or social impact, such as a solar energy company, and exclude those making a negative impact.

ESG (Environment, Social & Governance)

ESG stands for environmental, social and governance. These are non-financial factors investors use to measure an investment or company’s sustainability.

Watch video on what it means to be a socially conscious investor:

 

Read Blog on ESG Investing

 


More Articles & Resources for Eco-Friendly Investing

 

Eco-Friendly Guide to Finances and Saving

This guide from MoneyGeek offers expert advice and insight, valuable tools and resources designed to help you develop a “green” approach to your finances.

https://www.moneygeek.com/financial-planning/environmentally-friendly-finance-and-saving/

 

6 Ways to Make Your Money More Sustainable

https://www.yahoo.com/now/6-ways-money-more-sustainable-151607155.html

Financial Benefits of an Eco-friendly Business

Financial Benefits of an Eco-friendly Business

 

Green money: how your finances can help the planet

https://www.theguardian.com/money/2022/feb/07/green-money-how-your-finances-can-help-the-planet

https://www.pca.state.mn.us/regulations/small-business-environmental-improvement-loans

Ballast Advisors is a fee-based financial planning firm.  Our financial advisors serving the Twin Cities and Southwestern Florida can help you reach your retirement and financial goals.  Our offices are located in Woodbury, MN, Arden Hills, MN and Punta Gorda, FL.

IMPORTANT DISCLOSURES The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request.

Insights on Recent Market Volatility

Steve Schmidt - Financial Advisor, Arden Hills MN

We know that no matter how calm you are, no matter how long term an investor you are, no matter what your horizons, when the market is jumping around, you feel uncertainty.

Ballast Advisors Wealth Advisor and Partner Steve Schmidt offers some helpful insights for you to better understand how recent events and market volatility may impact your investments. Schmidt is the Chair of the Investment Committee for Ballast Advisors Advice and Wealth Management services.

 

Hang On! Volatility is here for a while

Russia’s invasion into Ukraine has rattled global markets. The S&P 500 Index, which has been under pressure in recent weeks due to rising inflation concerns, reached correction territory last week. Down -11% for the year at one point, the index has recovered slightly as news emerged that Russia and Ukraine may hold talks in Belarus.

As the table below shows, during historically significant geopolitical events, stocks commonly falter for a short period of time before recovering to prior levels.

Trust in diversification

When markets decline, your portfolio results will often vary if you’ve invested money across different baskets of asset classes like stocks and bonds. Diversifying, or distributing your money across investments, is key to reducing investment risk and smoothing the ride through a tumultuous market. Diversifying helps ensure your investments (eggs) aren’t concentrated in one type of asset (basket). So, if one stock or industry has a bad day, your other investments may help offset those losses.
 

Focus on the long term

When the stock market declines, it can be difficult to watch your portfolio’s value go down and do nothing about it. It’s normal to feel pessimistic after reading or watching the latest news, but if you’re investing for the long term, doing nothing is often the best course of inaction. 
It’s important to remember that when you sell investments in a downturn, you lock in your losses.
Take the February 2020 COVID-related market crash. An investment of $10,000 in an exchange-traded fund (ETF) that tracked the S&P 500 would have lost more than 30% or $3,000 of its value during the spring 2020 crash. If you’d had sold, you would have locked in that $3,000 loss. Those that held through the downturn, would have recovered from the downturn by August, with additional growth by the end of 2020 and beyond.  
Focusing on the long-term is often best. If you have questions about your portfolio or the markets, don’t hesitate to call Ballast Advisors.  

Ballast Advisors is a fee-based financial planning firm.  Our financial advisors serving the Twin Cities and Southwestern Florida can help you reach your retirement and financial goals.  Our offices are located in Woodbury, MN, Arden Hills, MN and Punta Gorda, FL.

What is the Fed Taper?

What is the Fed Taper? An economist explains how the Federal Reserve withdraws stimulus from the economy

Tapering refers to the Federal Reserve policy of unwinding the massive purchases of Treasury bonds and mortgage-backed securities it’s been making to shore up the economy during the pandemic. 

The unconventional monetary policy of buying assets is commonly known as quantitative easing. The Fed first adopted this policy during the 2008 financial crisis. 

Normally, when a central bank wants to reduce the cost of borrowing for companies and consumers, it lowers its target short-term interest rate. But with its target rate at zero during the 2008 crisis – at the same time that there was no inflation and the economy was still hurting – the Fed was no longer able to cut rates further. And so the Fed turned to quantitative easing as a way to continue to reduce borrowing costs. When the government buys assets, their prices go up, which lowers their yield or interest rate. 

 The Fed again adopted this policy in March 2020 after the COVID-19 pandemic resulted in a national lockdown. By November 2021, the Fed had bought over US$4 trillion worth of Treasurys and other securities. 

The U.S. central bank began tapering in November 2021, scaling back total purchases by $15 billion a month, from $120 billion to $105 billion. 

The Fed decided to double the pace at which it tapers on Dec. 15. Rather than $15 billion, the Fed will reduce purchases by $30 billion every month. At that pace it will no longer be purchasing new assets by early 2022. 

What is Fed taper chart

Why it matters 

Growing concerns among economists that rising inflation could harm the economy are likely a big part of what led the Fed to begin tapering. 

Inflation is the rate of change in the price of goods and services. The Consumer Price Index, which includes several categories of everyday items that a typical American might buy, is the measure of inflation most often reported in the media. In November 2021, it was up 6.8% from a year earlier. 

By any measure, inflation is above the Fed’s target of 2%. By tapering asset purchases, the Fed may help reduce inflation – or at least slow its rise – because it is withdrawing some of the monetary stimulus that is fueling economic growth. 

The reason the Fed has decided to accelerate the process is likely because it now believes inflation may be less transitory than it had hoped, at the same time that the labor market appears strong. 

What this means for you 

Americans have enjoyed rock-bottom interest rates for the better part of the past 13 years, helping to make it cheaper to borrow money to buy cars and homes and start businesses. 

Consumers and companies are already beginning to see slightly higher rates on mortgages, business loans and other types of borrowing. 

In other words, the era of cheap money may finally be coming to an end. Enjoy it while it lasts. 

Ballast Advisors is a fee-based financial planning firm.  Our financial advisors serving the Twin Cities and Southwestern Florida can help you reach your retirement and financial goals.  Our offices are located in Woodbury, MN, Arden Hills, MN and Punta Gorda, FL.


This is an updated version of an article originally published on Nov. 3, 2021. Copyright © 2022 RSW Publishing. All rights reserved. Distributed by Financial Media Exchange. RSW Publishing has an agreement to republish this author’s content. This article was originally published on The Conversation 

Author:

Edouard Wemy Assistant Professor of Economics, Clark University

Paul Slovic Professor of Psychology, University of Oregon

Disclosure statement Edouard Wemy does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Partners: Clark University provides funding as a member of The Conversation US.

Republish our articles for free, online or in print, under our Creative Commons license.

 

 

The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. BAL-22-02.

Data Privacy and Your Financial Planner

              Data Privacy and Your Financial Planner Data privacy week is January 24 – 28, 2022.  Here are some tips to help investors safeguard  personal information when it comes to working with a financial advisor. 2021 was a record year for the number of data breaches publicly reported, according … Read more

2022 Key Numbers

A popular tool, the 2022 Key Numbers document is a comprehensive list of tax bracket and deductions information to assist you as you consider your financial plan for the year. It contains the relevant numbers for:

Individual Income Tax Planning: Alternative Minimum Tax (AMT), Charitable deductions, Child tax credit, Classroom expenses of elementary and secondary school teachers, Earned income tax credit (EITC), Expatriation, Foreign earned income, Itemized deductions, Kiddie tax, Medicare tax (additional payroll tax and unearned income contribution tax), Nanny tax, Personal exemption amount, “Saver’s Credit,” Standard deductions, Standard mileage rates, 2022 Federal Income Tax Rate Schedules (Individuals, Trusts, and Estates), 2021 Federal Income Tax Rate Schedules (Individuals, Trusts, and Estates), Adoption Assistance Programs

Business Planning: Earnings subject to FICA taxes (taxable wage base), Health insurance deduction for self-employed, Qualified transportation fringe benefits, Section 179 expensing, Small business tax credit for providing health-care coverage, Standard mileage rate (per mile), Special additional first-year depreciation allowance

Education Planning: American Opportunity and Lifetime Learning Credits, Coverdell education savings accounts, Deduction for qualified higher education expenses, Deduction for student loan interest, Gift tax exclusion, Kiddie tax, U.S. savings bonds interest exclusion for college expenses;

Protection Planning: Eligible long-term care premium deduction limits, Per diem limit, Archer Medical Savings Accounts, Flexible spending account (FSA) for health care, Health Savings Accounts (HSAs)

Estate Planning: 2021 and 2022 gift and estate tax rate schedule

Government Benefits:Social Security, Medicare, Medicaid

Retirement Planning: Employee/individual contribution limits, Employer contribution/benefit limits, Compensation limits/thresholds

Investment Planning: Maximum tax on long-term capital gains and qualified dividends, Unearned income Medicare contribution tax (“net investment income tax”)

 

See More Free Tools

Ballast Advisors is a fee-based financial planning firm.  Our financial advisors serving the Twin Cities and Southwestern Florida can help you reach your retirement and financial goals.  Our offices are located in Woodbury, MN, Arden Hills, MN and Punta Gorda, FL.

IMPORTANT DISCLOSURES The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request