New England Capital Financial Advisors, LLC

The first six months of 2019 have been a good year. I mean the stock market gains for the first six months of 2019 would be above average performance for any 12 month period. The S&P 500 is up over 17% year-to-date with the first three months being up about 13% and the second three months adding an additional 4%. International investors as measured by the Europe, Asia, Far East (EAFE) index were up almost 2.5% in the second quarter and up over 11% in the first half of 2019.

The bond market continues its long stretch of low yields. The 10 year US Treasury Bond currently yields around 2% annually. If you had left half your money in the treasury bonds and half in the S&P 500 Index, your total return for 2019 would be almost 10%. Again, not a bad annual return jammed into the first six months of the year.

Where do we go from here? The US is growing at a “healthy tortoise pace”. We are still growing at about a 2% rate which is less than half the growth rate of historic expansions. This month, the economic expansion officially became the longest expansion on record.

Throughout my 26-year career, this question comes up quite a bit and is not always an easy one to answer.  After all, you have 8 years to choose from (as early as age 62 and as late as age 70).  Let me first say that everyone is unique, and decisions are not always financial-based.  Some decisions are based on health, life expectancy, and spousal needs.  There are pros and cons to starting Social Security early as well as taking it later.  This article will explore taking it early and my next newsletter article will focus on taking it later.

Before we get started, you need to know your Full Retirement Age (FRA).  Depending on when you start your benefits, they may be reduced for taking it early or increased if taking it late:

No. I’m not referring to the sex talk. The talk you need to have is about college. Not just about choosing the right college academically but also financially.

The college path is not right for everyone, even if the cost was free. Success, happiness and financial security can certainly be attained without a college degree. College diplomas don’t come with any written or implied guarantees of future fortune or fame…even diplomas from the most prestigious universities.

That being said, in our technologically sophisticated and complex society, advanced education and training beyond high school may be the best way to better jobs and higher lifetime earnings. According to The Center for Education and The Workforce, the average college graduate with a bachelor’s degree, will earn $2.8 million over his/her lifetime. The average high school graduate with no additional higher education will earn $1.5 million over his/her lifetime.

As some of you know, this topic is dear to my heart as I currently volunteer my time as President of the Connecticut Jumpstart Coalition for Personal Finance (www.ctjumpstart.org).  This Coalition encourages the development and implementation of programs to educate young people about personal financial management and responsibility. This includes convening conferences for students and training sessions for teachers; supporting financial education programs in-school, after-school and in conjunction with community partners.

In this article, I will discuss why teaching personal finance is so important, what new data is telling us, and some things you can do for your kids, grandkids, nieces, nephews, or other children to help them learn personal finance.

But first, why is this so important to me?  When we do not teach children about personal finance – about managing household budgets or making informed decisions about larger investments in education or at home – we are condemning them to learning it largely and perhaps entirely on their own, if at all.   If we teach them subjects like science, history, and math but do not teach them anything about personal finance, then we need to understand that we are making a conscious choice to release them into a financial world where they have to fend for themselves.

Many investors have been shaken by this year’s volatility, especially after the long calm period with positive returns experienced prior to 2018.

March 2019 will make the 10 year anniversary of the low point in the stock market after the Great Recession. Starting from that low point, was a tremendous tailwind that worked in our favor over the last 10 years and caused the US stock market as measured by the Standard and Poor’s 500 (S&P 500 Index) to rise almost 400%. Stocks are clearly not as cheap now suggesting their returns will be more modest over the next five years.

The following is a list of other tailwinds that help market performance and enhance economic growth and headwinds that hurt market performance and slow economic growth.