Broker Check

Monday Money Report

| January 29, 2024

The market reached an all-time high last week before retreating slightly on Friday.  This coming week, we have a trifecta of information coming: the Federal Reserve is meeting to discuss monetary policy, the December employment report will be released, and five of the so-called “Magnificent 7” big technology stocks will announce quarterly earnings.  We continue to believe interest rates aren’t going down any time soon, and that chasing stocks at the top of the market may not be the best decision.

Another thing that may not be the best idea is taking financial advice from social media. A trending concept is soft saving: the idea that you can wait until later in life, when you’re earning more, to save for retirement. After all, you’re only young once, and you should enjoy it. But delaying retirement savings has significant drawbacks. If you’re not contributing enough to your 401(k) or other retirement plan to get the full match, you’re giving away free money. Beyond that, even small amounts grow over time. The longer you wait to begin saving, the more you’ll need to put away to catch up. Dramatically changing your saving and spending habits to accommodate that later in life can be tough.

The opposite of soft saving is the FIRE movement, or Financial Independence, Retire Early. This is an extreme lifestyle, where every available penny is saved with the intention of retiring as early as possible.  Aside from missing out on much of life, retirement, especially at an early age, is often not all it’s cracked up to be. Most of us derive significant satisfaction from a job well done, and enjoy the intellectual engagement and social interaction that comes from work. Beyond that, if you retire at 50, what are you going to do for 40 or more years? That’s a long time with nothing to do.

Aside from turning off your social media accounts, a good middle ground is to save responsibly and manage your spending so that you can still enjoy your life. This can require some intentional thought: what’s important to you? Travel? A home where you can entertain? Spending on fitness and nutrition? Investing in your kids’ education? Whatever your goals are, start with that as you build a budget. It may mean a smaller house, or a cheaper car.  Maybe you don’t take big vacations, because you’re happiest at home, surrounded by family and friends. Many of us are fortunate to have pretty much anything we want; we just can’t have everything we want. Design your budget around your values, and your goals – both short- and long-term.

Your action item this week is to check your credit report at Check to make sure you don’t have any unusual activity, and that all accounts you do have are reported correctly.

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CovingtonAlsina is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.