The Classic Story of a Spender and a Saver

The untypical financial planning blog! Yes, my wife came up with the title as I get teased a bit for being a little frugal. However, we do try to find some humor in it. Hopefully some of these random thoughts will help you in your financial journey, So enjoy! - James Daniel, CFP®, CMT, EA Now for the DISCLAIMER: This blog is not intended as financial advice. We encourage you to consult with your personal advisor before acting on anything you read here.

increased tax savings on 529 contributions

Written on September 7th, 2016 by Jamesno shouts

I’m not sure how this news got by me, but the State of Georgia has increased the state tax deduction on 529 contributions:

New Georgia law doubles tax deduction for Path2College 529 Plan

May 05, 2016

ATLANTA — Governor Nathan Deal signed legislation that will double the state tax deduction for families filing a join tax return for contributions made to the Path2College 529Plan. Beginning with returns filed in 2017, joint filers are eligible to deduct up to $4,000 per beneficiary, per year, giving families even more advantages to saving for education-related expenses. Contributions up to $2,000 per year, per beneficiary remain deductible for those who file single or head of household. (Limitations apply. Read the Disclosure Booklet carefully for details.) Contributions to the plan made before the tax deadline each year are eligible for a state income tax deduction regardless of annual income.

House Bill 802, which was sponsored by Representatives Sam Teasley (R-Marietta), was signed into law on May 3rd by Governor Nathan Deal.

no such thing as a guaranteed return more than a 1.5% CD

Written on August 11th, 2016 by Jamesno shouts

Here we go again.  More headlines of investors being defrauded with “no risk / high return” promises.  The only guaranteed no risk investments are US Treasuries or Bank Insured CD’s.  They pay between 1% and 1.5%.  If someone mentions returns in excess of this with no risk, please run away quickly.

Felt like you haven’t made a lot of progress in the market over the past year?

Written on August 11th, 2016 by Jamesno shouts

I think this graphic of the S&P 500 sums it up pretty well.  A big volatile range since late 2014, and we just crested June 2015 highs this past month.

weekly investment client update for July 29th

Written on July 29th, 2016 by Jamesno shouts

One important question every new client asks is “how much communication do you have with clients?”  Here is a sample email that I send out each week to my investing clients to discuss what is happening in the markets:

Weekly Investment Update for July 29th

I guess I could just copy and paste last weeks update in today’s email.  The market has done a whole bunch of nothing as shown from the price chart of the S&P 500 below.  We have basically been trading sideways for 2 solid weeks now…..

Generally a consolidation period is good, however this is stretching out for quite a long time.  I still think we get a little more upside before some minor selling in early August.  However as I mentioned last week, I do think any pullback in the 2% to 3% range is a buy opportunity especially if Oil can turn around.  The price chart below shows how both Oil prices and Stock prices (S&P 500 index) moved up together from the low in February through June.  However Oil has corrected in July while stocks have traded sideways.  You can look at this two ways, either the oil drop will eventually pull down stocks for a little correction, or if Oil prices begin to move higher they will propel stocks upward.
We actually may see both occur, first stocks drop a little and then rebound with Oil.  No way to tell for sure but I would imagine stocks will move out of this 2 week range pretty soon.
In other news this week the Federal Reserve met and said maybe, just maybe they might hike interest rates in September.  Then today the GDP number (Gross Domestic Production) was released, which is the gauge the Fed uses to see how hot the economy is, and it was a bit below expectations at an annual rate of 1.2%.  The Fed wants to see more inflation so my guess is they will not hike real soon.  You are starting to see the stock market pick up, more help wanted signs out there and continued construction, but not quite enough activity for the Fed to put the brakes on the economy just yet.
Lastly, for many clients a little more was added toward your International allocation this week.  This fits within the allocation models as we were under-invested the past few years in that area.  Valuations overseas are a bit better than here in the States, so it was time to add a little to our holdings.


so you really want to use a “robo-advisor” to save a few bucks?

Written on June 30th, 2016 by Jamesno shouts

When you let an online system manage your money, are you ever really in control?  So what happens when you really want to get out of the market?  No advisor to talk with, just an online message that says “sorry no trading”.

click on link to read further:


Blog link regarding Fed’s testimony this week

Written on June 22nd, 2016 by Jamesno shouts

a good read on the Fed’s stock market valuation thoughts:

Negative Bond Yields around the Globe

Written on June 9th, 2016 by Jamesno shouts

This is a great visual of just how crazy the central bankers around the world are.  Although, maybe they aren’t crazy ones?  Maybe the folks buying these bonds are!

Retirement Minute Episode 14 – “are my social security benefits taxable?”

Written on June 6th, 2016 by Jamesno shouts

What’s up with world interest rates?

Written on May 20th, 2016 by Jamesno shouts

It’s been another volatile week as expected. Things were holding decently until the Federal Reserve meeting minutes were released on Wednesday and then the fireworks started.  Seems the Fed has now reversed course and gotten more “hawkish” saying they could in fact raise interest rates at their June meeting.

The market did not like that and all 3 of the major assets classes: stocks, bonds and commodities sold off.  I’ll comment more on the dilemma that the Fed has been put in below, but after all the gyrations this week my general feeling is we should be nearing a turning point for a little relief rally.
No guarantees but this entire monthly process still feels corrective as the market tries to work off the move up from a few months ago.  A lot of folks started turning bullish in April and that is when the market does its best to really whipsaw the bulls that are late to the party.
So let’s talk interest rates.  Do you guys remember back a few years ago when Europe was on the brink of crumbling because of the debt load of the PIIGS?  That is Portugal, Italy, Ireland, Greece and Spain.  Interest rates were skyrocketing in those countries as NO one wanted to hold their debt.  So fast forward to 2016.  The issues in Europe have quieted down, but certainly not gone away.  Would you believe that now the US interest rates are the highest in the developed world?  This is the dilemma the Fed is faced with.  How can the US treasury note, the most “risk free” asset in the world be trading at a higher interest rate than Italy and Spain?  Below’s charts show the recent snapshot of rates and historical movement over the past 5 years.
Can the Fed really hike US rates when everywhere else in the world is going negative?  Can they really hike rates in June right in front of the British vote to exit the European Union?  I say they are just jawboning and have no intention of raising, but we shall see.
5 year chart of rates.  Can you believe it?  US 2 year bonds are yielding higher than riskier Spanish 10 year bonds (negative!)  The yield is what the market demands for risk.  This is saying you buy Spanish debt and hold for 10 years and not only is there no risk of default, but you pay the Spanish government for the privilege of owning their debt……….
Inline image 1
2 year yields  (yes more negative interest rates, US is the only positive interest rate):
Inline image 2
The negative rates mean that at the price you pay for the bond you are guaranteed to lose money by the time it matures.  Crazy.
So the US keeps hiking rates, our currency strengthens and every domestic company in the US looses the ability to sell overseas?  (stronger currency hurts our companies that export product as it becomes more expensive to foreign buyers).  I just feel the Fed is in uncharted waters here.  We are in a world of negative rates, how can the safest “financial” country in the world keep raising them?
Interesting times…..