Friday Financial Five – October 17th, 2014

Friday, October 17, 2014

Dan Forbes, GoLocalWorcester MINDSETTER™

After a rough week, it’s time for a feel good Friday . . .

Economic fundamentals are still strong

When the major market indices all drop more than 7 percent in less than a month, it may cause a sickly feeling in the average investor. There are still economic issues that need to be addressed, but there are also plenty of positives that should be recognized. GDP is expected to continue growing at between 2.5 and 3 percent over the next few years. Job growth is staying around 200,000 on a monthly basis, and overall unemployment numbers continue to trend down. The question mark that remains is the Fed’s continued commitment to tapering and the timing of rate increases over the next few years.

30 year mortgage rates are nearing 4% again

Market gyrations have again pushed the thirty year mortgage down toward the 4 percent threshold. While the housing recovery hasn’t been the overwhelming economic driver it was in the early 2000’s, it has reached a more healthy and sustainable level. In the oversold areas of the country, investors can actually generate an income from an investment rental property. There is also a growing “non-Qualified Mortgage” market for those that don’t fit the Fannie Mae profile but are still considered good credit risks by some lenders.

Wallethub lists the wealthiest states

Wallethub has really dug into the concept of income and wealth inequality this year. They’ve produced another list, this time listing the richest states. The good news is there are still plenty of wealthy people out there, as the number of millionaires continues to increase. New Jersey ties with the District of Columbia atop the wealth leaderboard, while West Virginia and Mississippi finish at the bottom of the list.

Oil prices are falling dramatically

It is good news at the pump and for the heating bill as Brent crude, the international benchmark for oil pricing, has fallen considerably in the last four months. With individuals benefiting from a lower transportation and heating costs, Citigroup sees the drop in price leading to $1.1 trillion in stimulus for consumers, including a drop across many other commodities.

Election Day is coming

Finally, Election Day is near and that means the certainty of one positive thing. No, not the election of financially responsible leaders who will create a pathway to prosperity for the citizenry. That’s too much to ask. It does mean the temporary end of millions of dollars spent on advertisements and marketing that probably could be put to better use. Money pours in during each election cycle in the name of “free speech” for all parties. And, it seems, those elected to lead us have never been so unpopular. So who is funding the election economy that helps elect people nobody likes?

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