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Friday Financial Five – September 23, 2016

Friday, September 23, 2016

 

December rate hike in play

It’s a poorly kept secret that markets are reacting in a highly dependent fashion to Federal Reserve policy. While economic indicators are strong as a whole, the Fed has repeatedly delayed action to make sure positive trends are sustainable. Avoiding any possible adverse side effects of raising rates is taking priority. Retirees and savers continue to bear the brunt while borrowers will more than likely get another few months of extremely low loan rates. Assuming the election doesn’t create an overly emotional market reaction, the Fed will have the December meeting to possibly raise rates for the first and only time in 2016.

States file suit against overtime rule

Twenty-one states have filed a lawsuit against the federal government for imposing an overtime rule that the states feel will hamper their economies. The suit was filed in Texas to combat the December 1st ceiling hike for Americans to get overtime pay. The plaintiffs argue the rule issues fiscal mandates to states, making it unconstitutional. If the Obama adminstration averts this legal hurdle, the threshold will jump from $23,660 to $47,476 with the expectation that close to 4 million workers will benefit in the first year.

Congress looks to improve small employer 401(k) plans

The Senate Finance Committee passed to aid small business retirement savers. One provision, if implemented, would allow small employers to work together in Multiple-Employer Plans in an effort to save on administrative expenses. Annuities are another big issue as workers look for a way to guarantee return or provide retirement income without traditional pensions available. Finally, those over the age of 70 ½ may finally be allowed to contribute past that magic age. Slowly but surely, changes may be put into place that recognize the nation’s increased longevity.

Morningstar analysis favors passive over active

Morningstar Inc., which conducts a periodic review of performance by different types of mutual funds, has again determined that passive funds are superior to actively managed funds due mainly to lower internal fees. The difference is glaring when it comes to larger company stock funds. According to the Morningstar analysis, only half of actively managed large-cap growth funds have survived the last decade without being closed or merged.

Tim Duncan’s advisor indicted on wire fraud

The merry-go-round of advisors that take advantage of wealthy athletes continues. One of the more famous cases involves retired San Antonio Spur, Tim Duncan, suing his advisor last year for mishandling $20 million dollars. More details are emerging, as the advisor was indicted by a federal grand jury on two counts of wire fraud. The advisor allegedly defrauded Duncan on multiple loans, in which the advisor had a financial interest. Conviction would mean a maximum jail term of 25 years.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected]

 

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