Economic and Investment News Bits
- A sign of things to come? Long-term U.S. government bonds, which have held their value as well as any asset class over the last three years, took a hit last week. Vanguard’s Long-Term Treasury fund lost almost 7%. The overriding factor is the incoming president’s agenda that includes significant increases in spending for the nation’s aging infrastructure. This is seen as inflationary, with higher interest rates coming sooner rather than later. We are watching this closely, as it has implications for our client portfolio allocations.
- A rising tide did not lift all boats. In the aftermath of the presidential election, market futures were deep in negative territory early Wednesday morning, but managed to secure a surprising 250 point gain on Wednesday, followed by a gain of over 200 points on Thursday and about 40 points on Friday. But the gains are not broad-based, rather concentrated in health care and biotech, traditional energy, and bank stocks.
- Buckeye phenomenon. Ohio has correctly backed the winner of the U.S. presidential election in the last 14 elections (1964-2016). The presidents selected by our nation over that 52-year period resulted in Democrats winning 6 times and Republicans winning 7 times.
- Taxpayers who reported less than $50,000 of adjusted gross income paid 6% of all federal income tax in 2013, at an effective rate of 11% (Source: Internal Revenue Service).
- Start saving now. A child born in 2016 will attend college between 2034 and 2038. If public college costs continue to increase at their historic 5.5%, the aggregate cost of a 4-year, public college education would be $227,984, or almost $57,000 per year, (Source: College Board).
- 401k and IRA contribution limits won’t go up in 2017. You can defer up to $18,000 to your 401k and up to $5,500 to an IRA in 2017. If you are 50 or older, the limits are $24,000 and $6,500.
Thought for the Month
“When you’re 20, you care about what everyone thinks. When you’re 40 you stop caring about what everyone thinks. When you’re 60 you realize no one was ever thinking about you in the first place.”
Winston Churchill, British statesman (1874-1965)
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only. Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice. PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice. If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives. All rights reserved.