Emotional Well-being: College Student Mental Health

Posted on November 21, 2021 by admin

Improving the lives and futures of young adults by strengthening connections and building resilience.

Mental health continues to be a major concern on college campuses around the world, according to new research published by the American Psychological Association.

The research reveals that the prevalence of depression and anxiety in young people continues to increase, now reaching its highest levels, a sign of the mounting stress factors due to the convergence of the coronavirus pandemic, political unrest, and systemic racism and inequality.

Additionally, researchers from the World Health Organization found that a staggering 35 percent of first year college freshmen struggled with a mental illness. The most common mental illness observed was major depressive disorder, with 21.2 percent of respondents experiencing lifelong symptoms, followed by general anxiety disorder, which affects 18.6 percent of students.

When it comes to suicide in particular, the American Academy of Child and Adolescent Psychiatry points to data showing that by 2018, suicide was the second-leading cause of death for people between the ages of 10 and 24.

And, since 2014, anxiety and depression have been college students’ leading mental health issues, according to research conducted by Boston University.

According to the most recent Healthy Minds Study, which surveys tens of thousands of college and university students across the U.S., 41% of all students screened positive for depression over the spring semester, and 34% screened positive for anxiety. They are the highest levels observed by the study. However, this year’s results are part of a steadily increasing trend, and students surveyed said that while the pandemic impacted their mental health, it wasn’t the root cause.

Help is on its way

RADical Hope is a nonprofit committed to improving the lives and futures of young adults by strengthening connections and building resilience. The RADical Hope movement is two-fold: educate all constituents of the college community the warning signs and implore them to take action. And, help to identify students who need help but are not able to ask for it.

"It's tragic. And they come to school often overwhelmed. And whatever we can do to provide them with some peace and tranquility and happiness, that's one of our great missions," says Larry Bossidy on his goal to promote mental health awareness with @RADICALHOPE_Fdn. pic.twitter.com/C5o9kndCw9

— Squawk Box (@SquawkCNBC) November 10, 2021

RADical Hope wellness program, RADical Health, attempts to empower and equip college students with tools to stay well and stay resilient dealing with the day-to-day challenges of life on college campuses. Their strategy is to utilize proven effective techniques and procedures to counter the accelerating rise in college student anxiety and depression.

RADical Hope is currently partnering with ten colleges and universities to develop, identify and partner with frontline engagement programs that deliver three priorities: Connectivity, Engagement, Empowerment.

And, reaching college-age kids is vital. “64% of kids who drop out of college do so because of mental illness,” says Ken Langone, Co-Founder of Home Depot, who adds, “Our purpose [for RADical Hope] is to identify the kids who aren’t reaching out for help and assure them there is a better future.”

Tips that’s may help you maintain your mental health! Always remember to do what feels right for you. #MentalHealthMatters pic.twitter.com/dYCaxy1Yff

— RADical Hope (@RADICALHOPE_Fdn) November 3, 2021

References:

The National Suicide Prevention Lifeline contact is 1-800-273-8255 (en español: 1-888-628-9454; deaf and hard of hearing: 1-800-799-4889) or the Crisis Text Line by texting HOME to 741741.

Chase Your Purpose, Not Your Passion

Posted on November 20, 2021 by admin

Focus less on what makes you feel passionate, and more on what you truly care about, your purpose. Harvard Business School Professor Jon Jachimowicz

Chase Your Purpose, Not Your Passion, according to new Harvard Business Review research. The research shows that chasing your passion makes you less satisfied at work because work can be often difficult, draining, and even boring.

Research on passion suggests three key things:

Passion is not something one finds, but rather, it is something to be developed;
It is challenging to pursue your passion, especially as it wanes over time; and
Passion can also lead us astray, and it is therefore important to recognize its limits.

Trade “purpose” for “passion”.

We try to pursue our passion when we chase after what gives us the most joy or provides the most pleasure. In one study, researchers found that commencement speakers gave students advice on how to pursue their passion. Much of the advice centered on “focusing on what you love” as the way to follow your passion. But some speakers described the pursuit of passion as “focusing on what you care about.”

The distinction is subtle but meaningful: focusing on what you love associates passion with what you enjoy and what makes you happy, whereas focusing on what you care about aligns passion with your purpose, your values and the impact you want to have on your community and the world.

Instead of asking what makes you happy and “following your passion,” instead ask yourself what you care deeply about…what’s your purpose in life, according to Harvard Business School professor Jon Jachimowicz.

By focusing on purpose, you align your work with your deepest values, and also relieve yourself of the expectation that the long slog of a career will be all (or even mostly) happiness and sunshine.

Purpose gives you the resilience to succeed.

Jachimowicz says research backs up his claim that chasing purpose will make you more successful than chasing passion. “In a set of studies, he found that passion alone is only weakly related to employees’ performance at their work. But the combination of passion and perseverance–i.e., the extent to which employees stick with their goals even in the face of adversity–was related to higher performance,” he writes.

A well-rooted sense of purpose gives you way more resilience than passion alone ever could. And that resilience is what is likely to make you successful over the long haul.

Try to follow your passion and ask yourself this simple question: What do I truly care about?

Purpose is a far better career compass than passion and joy.

“You don’t “find your calling,” you fight for it…” Dave Isay, StoryCorps founder

“You don’t just “find” your calling — you have to fight for it”, explains Dave Isay, StoryCorps founder. “People who’ve found their calling have a fire about them. They’re the people who are dying to get up in the morning and go do their work.”

References:

Inflation and Investment Opportunities

Posted on November 19, 2021 by admin

Fiscal spending proposal has the potential to overheat a U.S. economy that is already struggling to keep up with record demand.

Rising inflation has Americans worried about their future purchasing power and their retirement plans, according to CNBC. Yet there are some opportunities to make and save money in this environment, as well as protect your investments.

With consumer prices up in October 6.2% from the year prior, inflation is too high and appears to be a clear and present threat to America pocket books and wallets.

With inflation at its highest level in several decades, economists are concerned that the pending multi-trillion dollar fiscal spending package will further overheat a U.S. economy already struggling to keep up with demand. The concern is that the package would exacerbate more fundamental supply constraints in the economy, driving up inflation over the longer term.

Thus, cash in the bank or in low-yielding bonds aren’t the best option in an inflationary environment when the stock market has gained nearly 27% this year, explains financial advisor Delano Saporu, CEO of New York-based New Street Advisors Group. Inflation reduces the value and purchasing power of that cash.

“If you are sitting on too much cash, you are doing yourself a disservice,” Saporu said.

Thus, it is recommended that you keep only enough cash to cover expenses for 12 months to 24 months. This way, if inflation becomes a big issue and causes stocks to tank, you aren’t forced to sell in a down market.

Investors do not love high inflation, which can hurt the growth prospects of high-rising tech stocks, among others. Because, higher prices can result in higher interest rates, which can lower the appeal of growth stocks compared to less risky alternatives.

The stock market tends to beat inflation given its rate of return, although growth may be slowed during inflation periods. Yet investing is for growth, not inflation hedges.

Since inflation is typically considered a result of a strong economy, financial experts recommend cyclical companies, which follow the cycles of an economy. That means sectors like industrials, energy and consumer discretionary. Also, gold, which is near five-month highs, and possibly cryptocurrencies are seen as inflation hedges.

References:

Emotional Well-being: Gratitude

Posted on November 18, 2021 by admin

“Cultivate the habit of being grateful for every good thing that comes to you, and to give thanks continuously. And because all things have contributed to your advancement, you should include all things in your gratitude.” Ralph Waldo Emerson

November is National Gratitude Month. There is always something on our daily lives to be grateful for.

In the Oxford Dictionary, gratitude is defined as “the quality of being thankful; readiness to show appreciation for and to return kindness.”

Gratitude is about putting our attention towards the positive. When you do that, you help improve your physical and mental well-being. It is one simple way to change one’s perspective of the world. It allows you to appreciate the positive, rather than focus on the negative aspects of your life and the world. Learning to be grateful helps you appreciate the little things in life that you may to take for granted.

Many of people express gratitude by saying “thank you” to someone who has helped them or given them a gift. But from a scientific perspective, gratitude is not just an action: it is also the positive emotion. It’s a state of being, where you feel a sense of appreciation that comes from deep within.

We should try to live everyday showing gratitude and appreciation to one another. Yet, as we get busy and focused on our day-to-day activities, responsibilities, and requirements.

Gratitude can be the same way. It’s not that we don’t feel thankful for things, people, or circumstances in our lives, but sometimes our lives get in the way and we lose focus on being grateful.

Research states that people who practice gratitude every day are not only happier but also healthier. On average, people who are grateful tend to have lower stress-related illnesses, lowered blood pressure, are more physically fit, happier, and have more personal and professional relationships with others.

There are many ways to embrace gratitude. And, it is important to acknowledge something each day that you are grateful for. Here are some other ideas:

Start a gratitude journal. Write a quick sentence about someone or something that you were grateful about that day. It can help you find appreciate for things around you, even among the stress from that day. And when you review what you’ve written, you’ll be able to reflect with appreciation those relationships or situations.
Say “please” and “thank you.” These simple words go beyond basic manners. They show respect, kindness, appreciation, and acknowledge someone else’s efforts. You could be the one thank you someone received that day.
Take the time for mindful reflection. Take a few minutes to focus on the present moment. It can reduce stress and cultivate the ability to be present in the moment and teach you to accept yourself and circumstances.
Spread gratitude. Share gratitude with other people. Tell them how much you appreciate their services, care, friendship, etc. Show your family how grateful you are to have them in your life, let them know how they make your life better just by being a part of it.
Give back to the community. Show your gratitude and appreciation by giving back to the community. Helping out in the community is a good way to appreciate everything in life. So do your part and become something that others can be grateful for.
Wake up and express gratitude for three things every morning. When you wake up each morning, try to immediately think of at least three things you’re grateful for. It can help you get in a positive mindset to start your day. You can express gratitude for something you’re looking forward to that day, or just for simply waking up again.

It’s easy to lose focus on gratitude. It’s t’s easy to forget that even the little things we do have a positive and beneficial impact on our family and friends.

Being grateful means finding and focusing more on the good. It means finding something to be grateful for amid the negative and chaos.

Gratitude has been proven to generate a positive impact on psychological, physical, and personal well-being. Practicing gratitude or reflecting on what you’re grateful for is an effective way to deal with life’s chaotic, stressful and tense moments. Grateful people tend to sleep better, have lower stress levels, exercise more often, and eat healthier.

“Give gratitude a try! You’ll be happier you did.”

References:

Choosing a Financial Advisor

Posted on November 17, 2021 by admin

Choosing a financial advisor is a major life decision that can potentially determine your financial net worth trajectory for years to come.

A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement, according to SmartAsset.com.

A recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor guided portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

But, it essential that you do your homework in selecting a financial advisor. There are several key questions to ask and factors to consider regarding anyone who may advise you in money matters:

What’s your philosophy of investing?” If they can’t articulate their philosophy in a few simple paragraphs, in plain English, then keep looking.
“What has been one of your greatest triumphs in the market? And what was the decision making that brought you to it? What did you learn from the process?” Then ask, “What about one of your biggest mistakes? What went wrong and what did you learn from it?”
“What do you own yourself? Where do you put your own money?”
Hire an advisor who is a Fiduciary. By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.
Pick an advisor with an compatible strategy. Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all-in on stocks, an advisor that prefers bonds and index funds is not a great match for your style.
Ask about credentials. To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.

Many people who want to oversee and manage your money probably don’t have significant assets of their own. You would want a money manager to have skin in the game, to be eating their own cooking.

References:

Planning and Achieving Financial Freedom

Posted on November 16, 2021 by admin

Financial freedom can be an elusive—and hard-to-define—goal.

Financial freedom is often said to be in the eye of the beholder. To some it may mean freedom of debt and being able to fund your lifestyle with your cash flow; to others it may mean early retirement on a Caribbean island. Whatever your financial goals or definition of financial freedom, there are ways and things you can learn to help you get your financial house in order.

Once you’ve decided that financial freedom is one of your top goals, you can start taking steps to achieve it. Thus, the first step toward achieving financial freedom is to define exactly what it means for you. You can’t generally achieve something that you haven’t defined. So, once you’ve defined what financial freedom means to you, you can start taking steps toward your goals.

“What then is freedom? The power to live as one wishes.” Marcus Tullius Cicero

Just because you have money does not mean you have financial freedom. There have been numerous people, especially professional athletes and entertainers, who have earned millions of dollars and subsequently lost it all through reckless spending and debilitating debt. Thus, even if you have a lot of money, if you don’t know how to manage and make your money work for you, it will more than likely disappear.

Financial freedom typically means having enough savings, financial assets, and cash on hand to afford the kind of life you desire for yourself and your families. It means growing savings and investments to a level that enables you to retire or pursue the career you want without being driven to earn a wage or salary each year. Financial freedom means your money and assets are working hard for you rather than the other way around…you’re working hard for your money.

In other words, financial freedom is about much more than just having money. It’s the freedom to be who you really are and do what you really want in life. It’s about following your passion, making choices that aren’t influenced by your bank account, net worth or cash flow, and living life on your terms.

Track your expenses

It’s difficult to know how to save money if you don’t have a good idea of where your money is going. Carefully track your spending habits for a typical month. Doing this will help you to become more conscious of your discretionary expenditures. It will also reinforce what expenses are essential and remind you to plan for unexpected expenditures, like medical emergencies and car repairs. Therefore, it is vital to understand and to know where your money is going.

Make a budget

Once you’ve taken inventory of your expenses, next step is to create a budget. While budgeting can sound like a cumbersome task, you may want to start by using a budgeting calculator to get a feel for how you are currently spending your money and how you’d like to change your spending.

One popular budgeting method is the 50/30/20 rule. The 50/30/20 rule is a way to divide your post-tax income based on your needs, wants and savings. The rule states that people should spend 50% of their income on their needs. This includes health insurance, housing, transportation, and groceries. Then, the guideline states that people should spend 30% of their income on wants or non-necessities such as entertainment, travel, and more. Finally, the last 20% of a person’s income should be saved or invested. This might include retirement savings and building a stock portfolio.

Once you have created a budget, don’t put it in a drawer and forget about it. Instead, make it a working and living document that you check and refer to often. Spend a half-hour per month reviewing how your actual expenses match your budget and make adjustments as necessary.

Automate your savings

Automating your savings and investing is one of the easiest steps you can take to ensure that you are on the path to financial freedom. You can set automated contributions to your employer-sponsored investments, including your 401(k) contributions and employee stock options.

When your savings and investing are automated, your money will continue to grow without you having to think about it. This will help you to reach your financial goals easily and quickly.

Have some percentage (10% to 20%) of your paycheck automatically deposited into a separate account—whether it’s a savings account, a 401(k) or an IRA. Money that isn’t easily accessible is not easily spent.

Unfortunately, many Americans are not saving enough to maintain their current standard of living during their retirement years. It was found that about 21% of Americans have nothing saved for retirement, according to the Northwestern Mutual’s 2018 Planning & Progress Study.

Start investing early

Follow the adage, the best time to start investing was twenty years ago; the second best time is today. You should start investing in a tax deferred account, preferably with your employer matching a portion or all of your contribution.

Planning for retirement is a marathon and not a sprint. Even if you are starting small, the most important thing is to get started. Therefore, it will likely take decades to reach your goal. Therefore, it is important to remember why you want to achieve financial freedom. Keeping your purpose, goals and the bigger picture in mind will help you navigate the day-to-day financial decisions.

Once you become financially free, you have more choices of how to live your life and spend your days.

When you decide that you want to start working toward financial freedom, it is important to remember that you will not become financially free overnight. However, according to certified financial planner David Rae, in a 2018 article in Forbes magazine, there are eight hierarchies of financial freedom that you can work towards:

Level 1: Not Living Paycheck to Paycheck – The first level of financial freedom is building up an emergency fund and paying off any credit card debt. Unfortunately, living paycheck to paycheck is the reality of millions of Americans. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2017, some 40% of households could not cover a $400 unexpected expense.
Level 2: Enough Money to take a sabbatical from your work – Accumulating enough money to be able to take a break away from work can be rewarding. This does not mean you have to quit your job, but it sure is a good feeling to know you can.
Level 3: Enough to be Financially Happy and still Save – it’s about enjoying your life and having the money to do it. There can be peace when you are earning enough to save, doing the things you enjoy and still having extra at the end of the month.
Level 4: Freedom of Time – Many people desire more flexibility with their schedules. Freedom of time and financial independence go hand in hand. Together, they are about following your passion, or spending more time with family, and not going completely broke doing it.
Level 5: Enough for a Basic Retirement – Think about what your bare minimum retirement would look like. By knowing your bare minimum retirement, and knowing that you have enough money saved to at least cover some standard of living in your retirement, will also influence other life choices you may make along the way.
Level 6: Enough to Actually Retire Well – Knowing you are on track to accumulate a nest egg to support that lifestyle is a big win. Well done to those who have accumulated enough assets, or passive income streams, to be in a position to retire well.
Level 7: Enough for Dream Retirement – It would feel great knowing that you are on track to have enough money to retire and be able to live your dream life. What is stopping you from getting there.
Level 8: More Money Than You Could Ever Spend – Having more money than you expected to spend is great. Building enough wealth so that you could not possibly spend all of it is another.

Bottomline is that if you want to be financially free, if you want to be able to live the lifestyle of your choosing while responsibly managing your finances, you need to become a different person than you are today and let go of the financial mindset that has created your current financial predicament and has held you back in the past.

Attaining financial freedom, which means having enough savings, investments and cash flow to live as you desire, both now and in your later years, requires a continuous process of growth, learning and emotional strength. In other words, whatever has held you back and provided you comfort in the past or kept you less than who you really are will have to be replaced. You will have to become comfortable for awhile being uncomfortable. And in return, the financially empowered, purposeful, and successful you will emerge — like a butterfly shedding its cocoon.

References:

Bridging the Divide: Racial and Ethnic Disparities in of Investing

Posted on November 15, 2021 by admin

Historically, people of color have been under-represented as investor of stocks and bonds in taxable brokerage accounts.

Due to decades of federal, state and local policies that advantaged white communities and systemically marginalized Black, brown and Indigenous communities, wealthy households in the United States are disproportionately white.

All levels of government have created conditions for the racial wealth gap through discriminatory and often blatant racial policies that favor white families over families of color.

A large disparity in stock ownership between racial/ethnic groups exist in the United States. Nearly two-thirds of American households have some form of investment, typically through taxable brokerage accounts, IRAs or employer-sponsored retirement account like a 401(k). About one-third (35%) said they owned stocks, bonds or mutual funds outside of retirement accounts in a Pew Research Center survey.

Although a sizeable number of households report owning investment accounts, people of color, particularly those who identify as African American or Hispanic/Latino, are underrepresented as investment account holders.

While African American and Hispanic/Latino adults make up 12 and 16 percent of the U.S. adult population, respectively, they comprise only 10 and 11 percent of households with taxable investment accounts, according to the FINRA study. Taxable investments include investments in stocks, bonds, mutual funds or other securities outside of retirement accounts.

Moreover, white families make up 65 percent of families but own nearly 90 percent of corporate stocks, nearly 90 percent of private business assets, and more than 76 percent of real estate holdings. Black and Hispanic families, in contrast, own 1.7 and 0.5 percent of corporate equities respectively, less than 2 percent of private business assets, and under 6 percent of real estate holdings.

FINRA Foundation’s National Financial Capability Study findings confirmed the presence of a persistent investment racial and ethnic divide: African American and Hispanic/Latino respondents were largely underrepresented as taxable investors and overrepresented in households without any investment accounts. Few had investments outside of a retirement account and many had no investment accounts whatsoever.

One encouraging trend was that the proportion of those owning a taxable investment account increased by 18 percent for African Americans over the six-year study period. However, gender differences, particularly among respondents of color, were more troubling, even when controlling for demographic differences. While the gap between white women and white men was relatively minor, with white women 6 percent less likely to own a taxable account than white men, across the six-year period, African American women and Hispanic/Latina women were 14 percent less likely than their male counterparts to own a taxable investment account. Similar gender gaps were identified among Asian American respondents.

The racial/ethnic composition of investing households indicates sizeable gaps between some communities of color and white respondents throughout the six-year period studied. Focusing on those with taxable investment accounts, African American and Hispanic/Latino adults are underrepresented relative to white respondents, although for African American respondents, the gap seems to be closing.

Still, understanding the role that race and ethnicity play in the likelihood of owning a taxable investment requires consideration of other key factors. Many people of color face obstacles that can hinder their capacity to invest. For example, income, wealth and educational disparities, stemming largely from structural racism, create barriers unique to this population.

The study examined households with taxable investment accounts; households whose only financial investments are in retirement accounts; and households without any investment accounts over the course of six years, from 2012 to 2018.

There was a large disparity between the investment account ownership of some communities of color and that of white adults. African Americans and Hispanic/Latino respondents were underrepresented among households with a taxable brokerage investment account and overrepresented among households without any type of investment account. Among African American and Hispanic/Latino respondents, nearly half reported not having a taxable investment account, while only about a quarter reported having taxable investment accounts.

The legacies of systemic racism and racial barriers are deep and complex. The data highlights that inequities across many areas, whether it be education, healthcare, criminal justice, or financial inclusion, are more pronounced for people of color and those from minority backgrounds.

Increasing the representation in taxable brokerage accounts of African Americans and Hispanic Americans may serve as a major factor to narrow a significant racial and ethnic wealth gap. It could enable people of color to benefit from market returns and close the wealth gap.

References:

FINRA Foundation’s National Financial Capability Study examined investment account ownership over a six- year period across households of differing racial and ethnic backgrounds.

Black Student Loan Debt Regrets

Posted on November 14, 2021 by admin

66% of Black borrowers say they regret taking out student loans

Student debt in America disproportionately affects Black borrowers, as reported by CNBC. Currently, 86.6% of Black college students take out federal loans to attend four-year colleges, compared to just 59.9% of white students.

Many Americans believe that student loan debt is beneficial, however, a large number of Black borrowers aren’t reaping these benefits, and the ongoing pandemic has only worsened this crisis. Instead, Black borrowers “believe income-driven repayment plans are a lifetime debt sentence”.

For many Black borrowers, student loans are not considered to be “good debt,” according to a study titled Jim Crow Debt by The Education Trust’s Senior Research Associate Jonathan Davis, PhD and Jalil Bishop, PhD.

Black borrowers liken student loan debt to 'Jim Crow,' https://t.co/C9C3UMR0Jg

— Portia Faces Life (@PortiaColorado) November 9, 2021

The study, based on nearly 1,300 Black borrowers, highlights the parallels between student debt and the racial wealth gap. More than half of Black borrowers in the study disagree that student loans contribute to racial equality (58%) or help them to build wealth (61%). Sixty-six percent regret taking out education loans that now seem unaffordable.

The desire for high paying jobs and financial freedom puts Black students in a bind, as their need for affordable access to higher education leads them to attend colleges with “less resources and lower endowments,” and take out more loans than someone at a better-funded institution, according to Dr. Bishop.

And after graduation, Black borrowers are “navigating labor markets, where they’re increasingly facing discrimination that then requires them to have to return back to higher education because they believe a graduate degree will help them be a buffer against some of that labor market discrimination,” he tells CNBC Make It. According to the Economic Policy Institute, even Black workers with an advanced degree experience a significant wage gap compared with their white counterparts, with Black workers being paid 14.9% less than white workers.

For decades, federal policymakers have “ignored the racial and economic evidence of inequality in student loan debt…insisting that canceling all student debt is the best solution to the crisis”, according to to report released by The Education Trust. Advocates believe limiting student loan debt cancellation harms Black borrowers the most and would prefer that the government cancel the loans rather than offer lower interest rates.

References:

U.S. Middle Class Owns Few Financial Assets

Posted on November 13, 2021 by admin

U.S. Middle Class Households Have Few Financial Assets, According to New Analysis from the National Institute on Retirement Security (NIRS)

New analysis finds that across generations, middle class households in the U.S. own few financial assets and the median amounts held fall far short of the assets needed to fund a secure retirement.

In 2019, middle class Millennials owned only 14 percent of their generation’s financial assets. The numbers are even worse for middle class Gen Xers and Baby Boomers, which owned eight percent and six percent, respectively, of their generation’s financial assets.

“In America, the middle class can no longer afford retirement. Middle class Americans face sharp economic inequality, with ownership of financial assets highly concentrated among the wealthy,” explained Tyler Bond, National Institute on Retirement Security (NIRS) research manager. “Now that we have a retirement system largely built around the individual ownership of financial assets in 401(k) accounts, middle class Americans are struggling to accumulate sufficient financial assets during their working years. This means the retirement outlook for many in the middle class is bleak at best.”

The research also finds low numbers when examining the mean and median financial assets owned.

For middle class Millennial households in 2019, the mean financial assets owned were $17,802, and the median was $7,800.
Middle class Generation X households had mean financial assets of $62,944, and median financial assets of $39,000 in 2019.
For middle class Baby Boomers, the mean amount of financials assets held was $93,298 in 2019, while the median was only $51,700.

Baby Boomer households are retired or near retirement, but their assets fall far short of what’s required to finance a secure retirement,” Bond explained. “A nest egg of $51,700, the median amount middle class Boomers hold, would generate only $2000 of income annually over 30 years. This means that many middle class Boomer households may struggle in retirement and could face a sharp reduction in their standard of living.”

The research indicates that implementing pragmatic fiscal policy solutions can help middle class households get on a better path to saving for retirement including strengthening and expanding Social Security; protecting defined benefit pensions; and ensuring access to a retirement savings plan through an employer.

For this research, the middle class is defined as those between the 30th and 70th percentiles of net worth, or the middle 40 percent. The research is based upon data from the Federal Reserve’s Survey of Consumer Finances (SCF). It examines financial asset ownership, a broader category than retirement assets.

According to the SCF, the category of financial assets consists of liquid assets, certificates of deposit, directly held pooled investment funds, stocks, bonds, quasi-liquid assets, savings bonds, whole life insurance, other managed assets, and other financial assets. It does not include physical assets such as a home or a car.

The data for this research is for households rather than individuals.

References:

https://www.nirsonline.org/2021/10/middle-class-u-s-households-have-few-financial-assets/

Long Term Investing

Posted on November 12, 2021 by admin

“For the vast majority of folks, set it and forget it is the best long-term investment strategy.” John Stoj, OVerbatim Financial founder

Long term investing may not be glamorous, but it works.

Investing consistently over a long period of time will give you a chance to profit from the growth in the stock market. And, the longer your capital money is invested in assets, the more potential it has to grow. ”

Think in terms of decades when investing instead of days and you’ll be wealthy before you know it!

When you sell a stock and earn a profit in the stock market, you are required to pay capital gains tax at either short-term or long-term rates.

If you held your investment for a year or less, you pay a short-term capital gains rate that that can be as high as 37%.

If you invested for the long term (over a year), you’ll unlock lower tax rates of 0%, 15%, or 20% depending on your income and filing status. By holding your investments over the long-term, you have the potential to make more money and pay less in taxes.

10 long-term investing strategies that work:

Have a financial plan – Having a plan is one of the most important considerations to make before investing for the long term. A plan puts your financial goals, as well as when and how you want to reach them, into context. It can also assist you to avoid being swayed by emotions when making investment decisions or during periods of high market volatility.
Start investing as early as possible – When you start early … not only do you get the compounding effects of the capital, but you also create the opportunity to buy at an average cost over time.
Don’t try to time the market.
Invest in what you understand.
Add a 401(k) match to your mix – free money is the only guaranteed, risk-free home run you’ll ever get. Yet many people still don’t participate even when they have access to a 401(k) with an employer match.
Set up and stick with sound cash-flow management – Setting up automatic retirement savings contributions is one way to establish a cash flow strategy. But you can also apply the strategy of automatically investing money (each month at least) during your working years to other areas. You may want to establish a rainy day fund of three to six months.
Set it and forget it with funds.
Make stocks a cornerstone of your strategy.
Diversify for a smoother ride.
Rebalance only when necessary.

References:

From Gratitude to Greatness: Brownlee Global's Path to a Purposeful Life

Guide and Educate Individuals How to Build Long-Term Wealth, Better Manage Their Money, and Achieve Financial Freedom

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