Blog | Journey Tree Financial Planning & Investments

I-Bonds

February 28, 2022

Given the current low interest rates and record setting inflation, many investors are looking for different ways to earn interest on their more liquid assets. Enter the I bond. A relatively unheard-of Treasury Department offering, the I-Bond is unique in that it’s rate is based on a combination of “Fixed Rate” and “Inflation Rate” to come up with it’s “Composite Rate”. The current “Composite Rate” the bond is paying is a whopping 7.12% annualized. With any deal potentially this good,…

New Era for the Stock Market

February 28, 2022

Market Update

“No living investor has experienced a global pandemic or the extraordinary monetary and fiscal policies that have been deployed to keep economies afloat. Without a playbook in hand, investors should beware of assuming that trends in recent years will repeat in the future.” – Chris Hogbin, Alliance Bernstein The stock market rose to historic levels in 2021. By some counts, as many as 70 record highs were recorded during the year. Buoyed by rock bottom interest rates (making it cheap…

Roth Conversions: What are they and when do they make sense?

December 6, 2021

Financial Planning, General

A Roth conversion is the process of moving traditional IRA dollars, which are taxed when withdrawn, to a Roth IRA which can be withdrawn tax free. Benefits of a Roth conversion Tax-free income in retirement Ability to pass assets tax-free to heirs Lower Required Minimum Distribution (RMD) For example, you have a traditional IRA with a $100,000 balance as of 12/31 in 2021 and you turn 72 in 2022. Your RMD for 2022 would be roughly $3,600. But let’s say…

Inflation – Where are we Headed?

December 6, 2021

General, Uncategorized

Over the past four decades, inflation has been a non-issue. Until now. While hovering around 2% for decades, inflation rates jumped to 6.2% in October 2021. Higher than it has been for over 30 years. 10 – Year Inflation Rate The Investopedia website says, “Inflation is a decrease in the purchasing power of money, reflected in a general increase in the prices of goods and services in an economy.” Prices of goods and services have indeed been rising. Lumber prices…

Student Loans – Due in 2022?

August 30, 2021

Financial Planning, General

The Department of Education announced in early August the final extension of the student loan payment pause until January 31, 2022. With this comes relief measures for eligible loans including: Suspension of loan payments 0% interest rate Stopped collections on defaulted loans Even with the extension, this highlights the need to plan for the resumption of loan payments for student loan borrowers in February 2022. Here are a few important questions every borrower should ask themselves soon to be ready…

Investing in a Sideways Market

August 30, 2021

Market Update

Today there are many signs that we are in an investment “bubble.” Michael Finke, Professor of Wealth Management at The American College of Financial Services defines a bubble this way: “A bubble occurs when the price of an asset inflates well beyond its fundamental value.” He goes on to say, “Bubbles often form when the imaginations of investors (speculators?) are inflamed by unrealistic expectations, sharp price increases, and fear of missing out.” These descriptions could well apply to everything from…

Book Review: The Psychology of Money – by Morgan Housel

May 20, 2021

General

Rare is the book that is at once wise and entertaining. The Psychology of Money is such a book. It is full of new perspectives about the modern world of finance. Its essays add greatly to our understanding of how to successfully negotiate our relationship with money. Housel writes in a clear and accessible style offering many fascinating stories to illustrate his points. The book consists of 20 brief chapters about a range of topics such as: Getting Wealthy vs.…

Is it Time for Inflation?

May 20, 2021

General

Those of us over a certain age may have a foggy memory of times when the prices of goods and services rose at a rapid and destabilizing pace. Inflation has ceased to be much of an issue for almost 40 years. The Federal Reserve Board, which sets the all-important Federal Funds rate on which most other interest rates are based, pushed that rate up to nearly 20 percent in 1980 to slow down the economy, ending the out-of-control inflation of…

Is Successful Investing Mostly About Luck?

February 23, 2021

Investing

Here’s an interesting story of luck to ponder. The story of Bill Gates. Bill went to high school at Lakeside School, just outside Seattle, in 1968. At this time computers were not a common occurrence in schools, not even in colleges. However, one of the teachers at his school believed that book study wasn’t enough without real-world experience. He realized that kids would need to know something about computers when they went to college. So, he petitioned the Mothers’ Club…

Investing versus Speculating – The Tale of GameStop

February 23, 2021

Investing

The dramatic rise in the price of GameStop Corp. stock took the nation by storm in January. Beginning 2021 at a price of less than $20 a share it exploded to almost $350 by January 27. What accounted for the more than 1,500% increase? A frenzy of speculation (or gambling if you prefer). An unprecedented mixture of neophyte retail investors, newly available free trading, hedge funds shorting (betting against) overpriced GameStop shares then having to buy them back as…