New followers, welcome to our Monthly Review!
In this post we review the top Economic, Financial and Market happenings from the most recent month and include a short video that details our thinking. A new additions to our Monthly review, straight from the trenches is our Hot Financial Planning Tip of the Month.
So let’s get going :
You Tube Directly
Hot FInancial Planning tip of the month: 401k/Pre-Tax Retirement account funding
There are right and wrong ways to fill that pre-tax retirement plan. This month’s tip comes from repeated trenches discussions and adjustments that go along with the turning of the calendar to a new year.
Spread the contributions as evenly as possible. AKA Dollar Cost averaging. You may be tempted to fill that 401k early for cash flow or other reasons. Resist it, we argue an even contribution reaching your maximums as late in the year as possible (see our Tax Cheat sheet here for 2014 IRS limits) works best in the long run.
You may need to exclude your bonus or other unusual cash flow event to hit your max late in the year. If you have questions, please reach out to us as we run these calculation frequently.
Side note and special extra tip (ok….a little cheesy but bear with us)
New 401ks in almost all cases should be a beast of aggression (click for our Beastly logic article) as your contributions make up the majority of your account, so be aggressive and welcome market maham, it will be better for your balance in the long run.
Non Farm Payroll — Two Strikes
The December report (January release) was expected near 200k and came in at 74k (wiff and a miss). The January report released in February, was 125k with the street looking for 180k. We have two strikes, and so far capital markets are happily ignoring this news. We will breathe much easier with a positive report later this week, due March 7, 2014.
Interest Rate Voodoo
Interest rates are so important, they have begun play opossum. We have tossed up a few fancy trend lines in order to help clarify their final movement. A break up or down MAY lead to accelerated movement. Even if you do not believe in the chart Voodoo, others do, adding pressure at these eventual break points. (Momentum in a sporting event…can’t see it, but it exists.)
The Year of the Buyout
With a SLOW Growing economy, both in earnings and especially Sales (top line.) This may be the year of the buyout. If you cannot build it, buy it. This is fine with us and represents an increase in confidence which is what we need moving forward. We will keep you updated as we progress through the year, but at this time it appears mergers/buy outs are going to be very popular this year.
Have a Great Day!
John A. Kvale CFA, CFP
8222 Douglas Ave # 590
Dallas, TX 75225