Reuters article: “Buy Time, Not Stuff, for More Happiness”

financialliteracy080816Hiring a baby nurse for a couple of nights bought psychology professor Elizabeth Dunn quality time with her husband when they were new parents, validating results from her happiness studies at University of British Columbia.

“It was very expensive, but well worth it,” said Dunn, who co-authored “Happy Money: The Science of Happier Spending.”

The world suffers from a “time famine,” sociologists say, as people reluctantly take on unpleasant tasks even though research shows time pressures can lead to anxiety, obesity and various ailments.

Spending to free up time brings more happiness than cramming something new into the closet, Dunn found in her recent study, “Buying Time Promotes Happiness.” Yet only 28 percent of people do it, regardless of income or country.

Click here to read the full article:


Join the @financial team for a 5/10K Charity Run | Saturday, February 24 at 10:00 am

MardiGrasChaserLogo_20163Join the @financial team for a 5/10K Charity Run | Saturday, February 24 at 10:00 am
Proceeds to benefit local charity Back on My Feet Chicago 

Shake the winter blues and join us for the most festive race to ever hit Montrose Harbor – the Back on My Feet Chicago’s Mardi Gras Chaser 5/10K.

As the lead sponsor of the event, @financial is forming a team of 10 individuals to run the race. Not a runner? Invite a friend, family member or colleague to join us.

  Who?    1000+ Back on My Feet Supporters 
  When?   Saturday, February 24th, 10:00am 
  Where?   Montrose Harbor (Chicago Lakefront) 
  Registration Fee?   No admission fee for first 10 to join the @financial team 

After the race, the party will continue at Fat Cat Restaurant, 4840 N. Broadway. Every runner will receive a free beer and there will be food galore. $15 Buffet will include the following perfect post run New Orleans fair.

Join our Team! Contact us at (312) 767-9064 or info@atfinancial to reserve your spot and to receive more details.

Learn more about the important work of Back on My Feet Chicago and how your involvement in this race will make a difference to those impacted by homelessness.

Market Commentary: 2018 Will Be Another Double-Digit Year for the Stock Market, But…

MarketCommentary2016-croppedYou don’t need us to tell you 2017 was a banner year for the stock market. The Dow gained over 25 percent, the S&P 500 added about 20 percent, and the Nasdaq nearly 30 percent.1 Looking ahead, we are forecasting another double-digit year for the markets in 2018, but there’s a catch: that double-digit number could come in the form of more gains or big losses.

If you’ve been reading this newsletter for a while, you already know we believe the stock market is overdue for a major correction—and we are not the only expert now saying it. Ironically, as the markets have soared to new record heights since Donald Trump’s election, more and more economists have come to recognize what we have been pointing out for years: that due to the lingering effects of quantitative easing, the markets are dangerously disconnected from economic realities, and eventually they will have to make fundamental sense again.

This disconnection became more obvious than ever in 2017. Yes, the economy saw modest improvement, with the GDP up from 2016, unemployment down further and wages no longer completely stagnant. But none of that adds up to an economy booming at record levels. Only the stock market did that, driven mainly by optimism over the promise of Republican tax reform.

Though the tax plan is now law, many economists are skeptical that it can deliver the kind of sustained economic growth Trump has boasted. That’s concerning because Wall Street has already priced that growth into the market and the tax plan almost has to deliver 4 percent or greater GDP growth in order for the economy to catch up with over-inflated stock prices. If that scenario doesn’t pan out, there’s only one other way for the markets to make fundamental sense again: a double-digit pullback, which history suggests could be anywhere from 40 to 70 percent.

Animal Spirits

While that could happen in 2018, there’s also a possibility that more double-digit growth could occur based on momentum. That’s because “animal spirits” are still running rampant on Wall Street. That’s the term coined by economist John Maynard Keynes to describe human behavior driven by instinct and emotion. Animal spirits are the reason the market set close to 70 new record highs last year, while the economy broke no records at all.2

This year, the animal spirits could go on howling loud enough to continue building up the “froth” or blow-off that already characterizes this market—meaning an impressive head of foam on top of a glass that was already full. That’s why we have based our market forecast on double-digit movement in either direction. If there is enough continued economic progress to keep the froth building, we believe we could see double-digit growth again in 2018. In fact, we do believe the momentum will continue in the beginning of the year; as to whether it continues the entire year is another question.

Of course, the more important question for investors near retirement is this: is it worth the risk when a double-digit drop is equally possible based on economic realities? In fact, according to some key details, the economy actually isn’t doing that much better than it was two years ago!

It was two years ago last month that we first shared our concerns about the Federal Reserve’s just-announced timeline for raising short-term interest rates. That was right after the Fed approved its first interest rate increase since lowering short-term rates to nearly zero in 2008, just before launching quantitative easing.

At the time, we said we were skeptical about the Fed’s goal of having short-term rates up to 2.5 percent by the end of 2017 for two reasons: First, it would strengthen the dollar and make it very difficult to hit their goal of 2 percent inflation. And second, raising short-term rates that high would mean that in order to avoid flattening the yield curve, long-term rates would also have to increase by at least 2 percent by the end of 2017—which we said was very unlikely to happen.

Warning Signs Persist

Well, guess what? Although the Fed has approved four additional rate hikes since that first one two years ago, the current Fed funds rate is still just in the range of 1.25 to 1.5 percent at the start of 2018, and the goal of 2.5 has been pushed back to the end of 2019.3 Why? For exactly the reasons we pointed out two years ago: inflation has mostly stayed below 2 percent, and long-term rates have not risen ahead of short-term rates enough to avoid risking a flat yield curve. The 10-Year Treasury rate was at 2.25 when we shared our doubts about it reaching 4 to 5 percent by the end of 2017. Today it is just at 2.47 percent.4

We have written a number of times about the importance of the yield curve. Keeping long and short-term rates separated by at least 2 percentage points is essential because banks depend on that gap to make lending worth their while. When the yield curve flattens, banks lose their financial incentive to lend, and businesses and consumers struggle to borrow. That’s not a recipe for economic growth, but just the opposite. It’s the kind of thing that could stall an economy completely, put an end to animal spirits and irrational exuberance, and finally force the stock market to make fundamental sense again with a major pullback.

We recently got another vivid example of how other economic experts are now recognizing the importance of some of the same details we have been focusing on all along. It happened when we tuned into a CNBC interview with one of the Federal Reserve’s regional presidents, who actually voted against their most recent rate hike. He explained his opposition by sharing some of the same concerns we shared two years ago—including the risk of a flat yield curve!5

Just as we did, he explained how continuing to raise short-term rates while long-term rates are still low could bring the current course of economic improvement to a screeching halt. The interview made us realize that not only are those warning signs we saw two years ago still in place, but even a member of the Fed admits to being concerned about them today!

1. CNN Money, “Dow Enters Final Week of 2017 Up 25 Percent, Poised for Best Year Since 2013” Space Coast Daily, December 27, 2017,

2. Kimberly Amadeo, “Dow Highest Closing Records,” The Balance, December 18, 2017,



5. Berkeley Lovelace Jr., “It’s not the Fed’s job to protect investors from losses, says central banker Kashkari” CNBC, December 19, 2017,

@financial eNews – Jan/Feb 2018 edition

@financial eNews – Jan/Feb 2018 edition
Take the @financial “Fitness Challenge” for 2018
Happy New Year from all of us at @financial. This year, make “financial fitness” the top of your resolution list for 2018.
To learn more about the specific challenges we have listed below and to sign up, contact us at or (312) 767-9166. The deadline for enrollment is Friday, January 19.

The economy is on a sugar high, and tax cuts won’t help (Source: Washington Post)

sugarhighBy Lawrence Summers
December 10, 2017
Washington Post

Lawrence H. Summers is a professor at and past president of Harvard University. He was treasury secretary from 1999 to 2001 and an economic adviser to President Barack Obama from 2009 through 2010.

The approaching end of President Trump’s first year in office, another strong employment report and a still-strong stock market make it appropriate to revisit my year-old judgment that the economy is enjoying a “sugar high.” Unfortunately, the best available evidence suggests that signs of current market and economic strength are largely unrelated to government policy, that the drivers of this year’s economic strength are likely transient and that the structural foundation of the U.S. economy is weakening. Sugar high remains the right diagnosis, and tax cuts are very much the wrong prescription.

Growth in the four quarters of 2017 now looks likely to come in at 2.3 percent, marginally faster than the consensus just before the president’s election. Consensus expectations for 2018 are only marginally greater today than they were before the election. So there has been no substantial updraft in the economy. In fact the United States has trailed the global economy in the sense that other countries, notably in Europe, have seen greater upward forecast revisions.

Click here to read the full article:

Market Commentary: Resolve to Maintain Your Fiscal Good Health in 2018

MarketCommentary2016-croppedHappy Holidays! It’s that time of year again when most of us start thinking about New Year’s Resolutions. Year after year, polls show that the most popular resolutions involve losing weight and/or exercising; in other words, improving our health. That’s smart, but don’t forget that physical and mental health go hand in hand, and stress and worry can undermine anyone’s efforts to achieve overall good health through diet and exercise alone.

We believe achieving—or at least working toward—fiscal good health can contribute greatly toward improving one’s health in general. That’s a pretty logical idea when you consider that studies consistently show the number one cause of stress for most Americans is worrying about money. That worry can increase significantly as retirement approaches—but it doesn’t have to.

The Right Mindset
For much of this year, as the financial markets have entered new realms of irrationality, we have focused on the importance of adopting the right mindset for good fiscal health. The right financial tools and strategies are essential, of course, but odds are, you aren’t going to end up using them unless you make the necessary shift in the way you think about saving and investing within 10 or 15 years of retirement.

If you’ve kept up with our monthly newsletters, you already know all this, but just as you must work to maintain good physical health once you achieve it, you must make the same efforts with your fiscal health. It’s never a good idea to put any part of your financial plan on autopilot, and that includes the psychology behind it. It can be especially tempting in this day and age, with so much hype around the over-inflated stock market, to fall back into outmoded ways of thinking and start thinking of “growth” as the be-all and end-all of financial success.

Not only is that potentially dangerous, it’s just plain wrong. We pointed this out in a recent newsletter in which we explained that when most people say they want “growth,” what they really mean is they want a good, competitive return. Total return, remember, is the sum of both growth (in the form of capital appreciation) and income (in the form of interest and dividends). In our experience, staying focused on the latter more so than the former near and during retirement is the key to reducing risk, thus reducing stress and maintaining good fiscal health.

Remember, too, that this can be done without necessarily sacrificing return, as income-based investors have proven since the turn of the century. As we pointed out recently, although the stock market has soared by over 60 percent since 2000 (and over 20 percent since just last October), the actual average annualized return for buy-and-hold investors has been about 5 percent with dividends factored in. Plus, they had to endure the stress and uncertainty of two major market plunges—from 2000 to 2003 and 2007 to 2009.

By comparison, many income-based investors whose portfolios have been properly managed during this same period have achieved close to 5 percent income annually and greater than a 5 percent average annualized return! More importantly, they’ve done it with far less risk of a major loss during those two huge market drops, and without the continued risk of a third major stock market drop. To put that all in a simple formula that summarizes our point: comparable return plus less risk equals less stress and improved fiscal good health!

Get Healthy, Stay Healthy
So, by that logic, the first financial resolution on your list should be to make that shift if you haven’t yet done so. You should re-examine your way of thinking to ensure you still have the right mindset for saving and investing after age 50—a mindset in which protection and income are your top priorities. Some additional resolutions that might accompany and help you achieve the first one include the following:

Revisit Your Goals – We recommended doing this as part of your year-end financial planning checklist in last month’s newsletter, but if you don’t get to it before the end of the year, make it a top priority after January 1. Again, goals can change, and sometimes they must be adjusted in response to new developments and circumstances in our lives. At the same time, your financial strategy may periodically need to be adjusted to make sure it is still aligned with your goals—and not potentially jeopardizing them.

Reexamine Your Risk – This is another one we recommended for your year-end checklist, but there is never a bad time to schedule a meeting with us to better ensure that no new potential “weak spots” have developed in your financial plan. Again, long-term fiscal good health is, just like physical health, a matter of maintenance. That includes working with us to maintain the appropriate strategies in accordance with the appropriate mindset.

Help Someone Else “Get Healthy” – Study after study has shown that doing good for others is also good for you! So, when taking steps to improve your own fiscal health, include regular efforts to also improve the fiscal health of people you know and care about. That effort could mean making a commitment to invite someone to an educational workshop. It could mean striking up a conversation with one person each month about growth versus return and opening their eyes to the fact that increasing one’s retirement income actually involves reducing financial risk, not increasing it. Or, you could simply recommend a book geared toward educating investors near retirement about how to achieve fiscal good health by reducing risk and focusing on income. There are several such books on the market now, and we would be happy to recommend or even provide you with one. It would make a great holiday gift!