When the Federal Reserve met in July, eight of the 12 regional banks voted to raise the discount rate, the interest rate the central bank charges for loans to commercial banks, from 1% to 1.25%, minutes show. While the Fed left the rate at 1%, the vote marks the first time that a majority of the regional banks favored raising the discount rate since the central bank raised the benchmark federal funds rate in December.
It is never too early to begin educating children about personal finance, experts say. Setting a good example and repetition are keys to teaching good financial habits.
People overwhelmingly think higher education is a good investment, despite the rising cost of college, according to a Bankrate survey. "People need to mindful of the return on their investment and making sure they can manage any debt incurred," Bankrate analyst Steve Pounds said.
More than half of baby boomers know someone with Alzheimer's disease, a condition that must be considered when creating a long-term financial plan. "Unexpected conditions and medical expenses that manifest later in life pose a great threat not only to physical and mental health but also to the financial well-being of both the care receiver and the caregiver," said Scott Thoma of Edward Jones.
Putting a pension lump-sum distribution into an annuity in some cases gives retirees options not available under the pension plan, write William Byrnes and Robert Bloink. "As most clients know, today's annuity options are incredibly varied so that the client will be able to accomplish a variety of goals, rather than simply receiving a set monthly payment," they write.
Advisors are increasingly recommending that clients include annuities as part of their retirement income strategies. A Brookings Institution report has praised longevity annuities, which don't start paying out until about age 85 as a particularly promising option that is less complicated than managing withdrawals in retirement from several sources of income.
Higher fees affect performance most regarding active versus passive investing, according to a Morningstar analysis. Passive, index-based strategies have an edge to active investing, the analysis shows, while active management ranks last for large-cap stock strategies.
Young advisers can bring fresh perspectives to their firms. Presenting them effectively requires a delicate balance of respect for existing structures and a willingness to be part of the solution, writes Laurie Belew, chair of FPA's NexGen.
Confusion about fee structures for retirement accounts is rampant, with 46% of employed baby boomers thinking they pay no fees, according to one poll. A median-income couple in the US will pay six figures in investment fees over a 40-year period.
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