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Monthly Archives

June 2015

Jun 30
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6 Topics to Discuss with Recent Graduates

By News

As new graduates leave college and transition into adult life, there are many aspects of their financial situations that will change. Here are some financial areas that you may want to talk about with recent grads.

  1. Develop a Discipline to Control Spending– Managing expenses will be one of the first financial tasks a new graduate will have to conquer. Creating a budget to monitor larger costs like housing and transportation, as well as smaller everyday expenses can help keep track of where money is being spent and can help identify unnecessary splurges.
  2. Saving for the Unexpected– The next goal for a recent graduate should be to save up an emergency fund that will cover 3-6 months’ worth of expenses in case of an unexpected expense or loss of employment. This can be difficult when student loan payments are due and getting a start on retirement savings is being constantly encouraged, but an emergency fund should be a high priority.
  3. Student Loan Debt– Most recent college graduates will begin their careers with a fair amount of student loans to pay off. Student loans or any other forms of debt that charge the highest interest rates should be paid off first. Just meeting the minimum payment may be the best option early on though as an emergency fund is built up and money is diverted towards retirement savings.
  4. Saving for Retirement– Once debt is under control, saving for the future, namely retirement, is the next big step. Starting early is crucial for young new grads as they have one major advantage; time. Taking advantage of their employer 401(k) plan with a company match is a smart place to start.
  5. Investing Long-Term– Retirement savings should be invested with a long-term view, as a recent graduate who starts saving in their first few years will allow that money to compound for the next 40+ years. Short-term market fluctuations, even drastic ones, should not be cause to panic.
  6. Credit Rating– A young adult will also want to familiarize themselves with their credit rating and how missing a loan payment or electricity bill could affect them when making a big purchase down the road, like a car or house.

All of these responsibilities will take some time to implement, but they will offer the recent graduates a good learning experience in balancing their short and long term financial goals.

Jun 29
Love0

“Grexit” Drama

By General

We agree with the views of one of our favorite Economists on the above subject. It is copied below:

Ignore Greece

Don’t let anyone tell you Greece is sticking up for its “dignity” by fighting “austerity.” The current Greek government is sticking up for socialism by fighting reality.

After several years of working toward some very minor market-friendly reforms, and finally starting to see a glimmer of economic growth, Greece elected a far left government back in January. It’s economic and financial situation has gotten worse ever since. Instead of trying to boost growth and pay its debts, by trimming government spending and reducing regulation, the government is saying it won’t cut retirement benefits and wants to raise taxes on what little private sector it has left.

Since Greece no longer has its own currency, it can’t just devalue and cut pension benefits by sleight-of-hand. Instead, politicians have to make tough choices. Greece finally ran out of other peoples’ money. And, since private investors will no longer buy Greek bonds, it has to count on government entities. Fortunately, so far at least, the IMF, the EU, and the ECB have refused to support the status quo.

So what does the new government do? It blames the only groups willing to lend it money and refuses to cut spending. Then, it decides to have a vote, scheduled for July 5th, on the lenders’ latest offer, which would combine higher taxes with pension cuts and some other market reforms. This referendum is all about politicians running scared. They don’t want to make the choice themselves, so they put it to a vote, again.

But Greece has debt payments to make this week, before the vote, on which it’s likely to default. Worse, the government is urging citizens to vote against the lenders’ offer.

Meanwhile, Greek banks have seen massive outflows of deposits. To meet the demand for liquidity, Greek banks have been getting Euros from the Bank of Greece (their central bank), which prints them with permission from the ECB. But now that a debt default is a serious concern, the ECB has withdrawn its permission for the Bank of Greece to print more Euros.

So, the Greek government has declared a “bank holiday” until July 6, during which depositors can only withdraw 60 euros per day. Greece also imposed capital controls to try to keep Euros in the country. This is a travesty, and Greece is headed for a double-dip Depression.

Fortunately, Greece is not Lehman Brothers. It’s like Detroit. When Detroit defaulted, the U.S., and even Michigan, survived just fine. Detroit had already wasted the money it had borrowed, and so has Greece. The only thing left is recognizing the loss. That does not damage the economy; it will be absorbed by the IMF, EU, and ECB.

What Europe wouldn’t be able to absorb is if it caved to the Greek government, if it let them rollover their debts without insisting on reforms that will help Greece eventually repay its obligations. That would bring more Euro leftists into government and lead to even more stagnation and default in the future.

Regardless of how this turns out, it’s getting way more press than it deserves. Any sell-off in US equities is a buying opportunity. Stay the course.

Brian S. Wesbury – Chief Economist
Robert Stein, CFA – Deputy Chief Economist

Jun 25
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Radio Podcast: Family Office Services Support A Family’s Mission To Preserve Wealth, Legacy and Values

By Family Office

On June 22, 2015, Prateek Mehrotra, MBA, CFA®, CAIA®, Chief Investment Officer, and Wendy Orth, Investment Adviser Representative of Endowment Wealth Management join “Money Matters with Christopher Hensley” radio show. In an informative 30-minute interview, Prateek and Wendy provide an informative interactive discussion that describe the multitude services that a family or multi-family office is designed to support your family’s wealth and legacy within the family’s value system.

Money Matters

 

 

 

 

 

 

 

 

 

 

 

This 30-minute podcast provides an informative discussion that covers the services, organization, purpose, mission and support that a family office or multi-family office provides to its client.  Prateek and Wendy join the show at the 5:30 mark on the podcast.

A traditional family office is a business run by and for a single family. Its sole function is to centralize the management of a significant family fortune. Typically, these organizations employ staff to manage investments, taxes, philanthropic activities, trusts, and legal matters. The purpose of the family office is to effectively transfer established wealth across generations. The family office invests the family’s money, manages all of the family’s assets, and disburses payments to family members as required.  The family office structure takes into account nurturing the human capital within the family along with their financial wealth with a multi generational perspective.

The Family Office itself either is, or operates just like, a corporation (often, a limited liability company, or LLC), with a president, CFO, CIO, etc. and a support staff. The officers are compensated per their arrangement with the family, usually with overrides based on the profits or capital gains generated by the office. Often, family offices are built around core assets that are professionally managed.

 

Jun 18
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Largest University Endowments Afford Their Schools Competitive Advantage

By General

A recent article by CNBC economics reporter John W. Schoen provides an in-depth look into reasons behind the rising cost of higher education in the U.S. It’s a complicated issue, with many moving parts. The after-effects of the 2008 recession, expanding student services, required budgetary expansion in state budgets, such as pensions, healthcare and Medicaid, and other issues have forced schools to increase the student tuition costs.

The improved economy and recovering markets have helped private institutions repair the losses to their endowments caused by the Great Recession.  However, the wealthiest schools with the largest endowments are more successful in fund raising and are receiving an increasingly greater share of donations.The top 40 richest schools received nearly 60 percent of all gift revenue last year, according to Moody’s. Comparatively, most schools have far less money to help subsidize the cost of higher education. The median endowment size for the largest 50 schools is $3.5 billion, while the median college endowment for the entire endowment universe was just $113 million.

That leaves schools with smaller endowments at a disadvantage competing for the best and brightest applicants. For example, at wealthier schools, the share of tuition paid by students is about 15 percent, while the average share of tuition paid for at all private colleges is 75%.

The entire article can be read at: http://www.cnbc.com/id/102746071