KFA Blog

Second Quarter Market Summary

By:  Lisa Thuer - Senior Trading and Research Specialist and

Michelle Smalenberger - Director of Client Services and Financial Advisor

Dear Friends,

Among the quarter’s economic news, U.S. GDP growth—one of the primary indicators used to gauge the health of the country’s economy—was b2ap3_thumbnail_Market.jpgrevised further downwardfor the first quarter, marking the largest drop since early 2009. Expectations are for growth to rebound in the second quarter (after a very harsh winter depressed activity in the first part of the year); however, the fact remains that the economic recovery continues to be subpar. Other indicators were more positive, including continued improvements in the labor market, though wage growth is still very slow. Global monetary policy continues as a significant swing factor affecting financial markets and the trajectories for geopolitical conflicts (in Ukraine and Iraq most prominently) are a further unknown.  Private sector balance sheets continue to strengthen (reflecting the U.S. household and financial system deleveraging that has occurred since 2009). This lessens the odds of another financial crisis and is a key support for the recent increase in our estimate of fair value for the stock market as we discounted a less stressed macro environment.

For investors, though, the second quarter was positive. Larger-cap U.S. stocks were up 5.2% for the quarter and 7.0% for the year to date, after rising more than 2% in June. Smaller-company stocks again lagged as they have so far this year, though they posted a very strong 5% gain in June.  Developed international stocks rose 4.4% as the European Central Bank took further easing steps to combat the risk of long-term deflation while Japan’s Prime Minister Shinzō Abe continued his multi-pronged effort to generate healthy inflation and boost Japan’s economy.

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Giving Well to Future Generations

By:  Michelle Smalenberger - Director of Client Services and Financial Advisor

b2ap3_thumbnail_Future-Generation.jpgAs a new parent, I can think of few things more important than always wanting to provide the best and give all I can to support and encourage my daughter.  But in doing so, am I hurting her desire to excel and accomplish to reach her full potential?  Is it possible to provide these good things at the wrong time and in the wrong way?  Regardless of how old your children are, you can make a large impact on their life in the way you support them.

Supporting our children happens in many ways including emotionally and financially.  I hope to share ideas for both as some of you may be thinking “What if I can't just give them money?”.

At Kabarec Financial Advisors, we work with clients of all ages and hear all sides about how family members feel about money.  As a Financial Advisor, I have had a front row seat to observe all points of views regarding inheritances – what is hoped for or expected and all the accompanying emotions.

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We Value our Relationship with You

You are a Young Professional with unlimited potential and more earning power than any generation before you. You’re part of a successful group of individuals that are in trainingb2ap3_thumbnail_Young-Professional-Group-Photo.jpg
to be future leaders. We, here at Kabarec Financial Advisors, Ltd., are very excited about the recent addition of our Young Professional offering!  We understand that people of all ages need financial advice and guidance from a professional advisor who keeps up with the financial industry.  Young Professionals who are entering into and continuing in their careers have to make decisions about employer benefits, insurance, taxes as well as how much to save.  In your primary or secondary education there may not have been any required financial classes that taught you specifically about these topics.  

Young Professionals are in a continual state of transition: from being single to married, married to starting a family, and then meeting the needs of your growing family. As the pace of your lives increase, your ability to make clear, long-term financial decisions is often deferred by other immediate priorities.  This is why an objective, experienced Financial Advisor can help you successfully plan for your financial future.  It is critical for Young Professionals to begin a relationship today with a Financial Advisor.  It is never too early to begin!  You will be able to work with the same team through each life transition.  We will provide you with strategies and solutions for your specific needs. You can have peace of mind knowing we area looking out for your best interest and are happy to help guide you through the necessary decisions.  

Every decision you make either leads you toward achieving your goals or further away from living your dream. Take advantage of the time that’s on your side!  If you or someone you know needs a Financial Advisor, please contact us today at 847-934-7777 for your free consultation!

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The Rollover IRA - Taking It With You

b2ap3_thumbnail_Rollover-IRA.jpgMany generations before us found jobs they kept for 20-40 years before retiring.  But in our generation, we might have a job for a few years then find new employment to further our career or to find a better opportunity.  Did you know you can take your Employer Retirement account with you when you leave?  Your 401(k) or Roth 401(k) can be rolled into a Rollover IRA (Individual Retirement Account) or a Roth IRA, in your name.  This is not a taxable event as long as you roll the funds directly into your IRA.  You can find substantially more investment options outside of your Retirement plan.  You will also have control of your own money.  Leaving your retirement account adds one more account to keep track of.  You can consolidate old Retirement plans together.  There are many investment options you have to match your risk tolerance and time horizon.

Kabarec Financial Advisors Ltd. welcomes the opportunity to help you make sure any old IRA’s are invested with your future in mind.  Call us today to schedule your free consultation at 847-934-7777.

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How Much to Save?

Everyone earns a different income.  They also have different financial obligations.  One set dollar amount is not going to answer everyone’s question of “How much should I be saving?”.  Below are some basic guidelines you can follow to determine how much to save:

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1. The first rule of thumb is to set aside 3-6 months of living expenses as an emergency fund.  (3 months if your 

household has two wage earners and 6 months if you have a single income.)  You want to be sure that your long-term savings you begin building are not hindered by short-term, unexpected expenses. 

In the next 10-20 years there will be unforeseen expenses, but if you have the proper emergency fund you can allow your long-term savings to continue accumulating even if you have to temporarily stop adding to the account.  A savings account is a good vehicle to use for emergency funds, as the money stays liquid and available when you need it.

2. Now that you have established an emergency fund you can begin saving for longer-term goals, like retirement.  First take advantage of your Employer’s Retirement Plan if this option is available to you. Often you will receive a matching contribution.  That’s free money!

A general rule of thumb is to save 10-15% from each paycheck.  These plans are designed for long-term retirement goals.  If you remove funds before 59 1/2, you could incur penalties and income tax. 

3. Once you have an emergency fund and are setting money aside in your Employer’s Retirement Plan, you can further build additional savings.  

Popular accounts that people use are taxable investment accounts in addition to traditional and Roth IRAs.  Due to various eligibility requirements, working with a Financial Advisor can help you decide what the most appropriate type of account is for your needs and the goals you are trying to achieve. 

Tax implications today and in the future are important to consider.  Your time horizon and risk tolerance will also make a large impact on the type of account you use and where you invest contributions.  Your Financial Advisor can help you choose the most appropriate funds in your Employer’s Retirement Account and other savings accounts, whether it is an interest-bearing account or one with investment options. 

The sooner you adopt a habit of saving, the longer your money can work to achieve your goals!

Kabarec Financial Advisors, Ltd. welcomes the opportunity to speak with you about your savings plan.  Schedule your free consultation today at 847-934-7777.

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