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CNBC
02-07-2025
- Business
- CNBC
With stocks at record highs highs, financial advisors warn not to chase the market. Do this instead
With the stock market near record highs, investors may be itching to go all in — but the last thing they should be is reactionary, according to financial advisors. Stocks moved higher on Wednesday, with the S & P 500 hitting a new intra-day high. On Monday, both the S & P 500 and Nasdaq Composite closed at record levels. Despite the volatility that hit the market this year, the three major averages all ended the second quarter on Monday with solid gains. Growth stocks have outperformed value stocks so far this year, with the iShares S & P 500 Growth ETF returning 7.57% and the iShares S & P 500 Value ETF ahead 4.21%. Those that try to figure out what the market or different sectors may do next are taking the wrong approach, because you can't predict what is going to happen, said certified financial planner Carolyn McClanahan , founder of Life Planning Partners and a member of the CNBC Financial Advisor Council . "Sometimes things are going to cool off and you are going to regret trying to chase the market and making decisions based on current market behavior," she said. "The smart thing is to have an asset allocation already determined in advance — and that should be based not on what the market is doing but on what your goals and needs are." There tends to be general themes permeating the market at different times — and these days it is policy from Washington, D.C., said Adam Reinart, chief investment officer at Marshall Financial. "Trying to time that has been a bit of a fool's errand this year," he said. Case in point is the nosedive the market took after President Donald Trump announced his reciprocal tariffs in early April, which caused some investors to shift more defensively, he said. But that wound up being the wrong move since the market recovered, he said. In fact, investors should check their allocations after the recent run up to maintain a diversified, all-weather strategy, Reinart said. "With recent equity performance obviously improving from April 2, if the equity portion of an investor's portfolio has appreciated and has skewed risk more aggressively, then it could be a good time to realign risk more in line with their risk tolerance," he said. Grabbing income with dividend stocks Dividend stocks become more appealing to investors during rocky markets. However, they can play a role in an overall diversified portfolio even when conditions are less turbulent. In fact, investors should think about the total return of their portfolio — income plus capital appreciation, said Marguerita Cheng , CEO of Blue Ocean Global Wealth, a certified financial planner and another member of the CNBC Financial Advisor Council. She cautions against only thinking about income when the markets get shaky or moves down. "Including dividend payers in your portfolio can level out the volatility, but I want people to think about total return investing — which means that you have growth and value in there — and that provides you a little bit more flexibility," she said. An allocation to dividend stocks may become more important as people approach retirement and need income. McClanahan likes passive index funds for equity allocations. That can include those that follow broad market indexes — such as the S & P 500, small-caps and international equities. For those who are seeking income, she prefers bonds over dividend-paying stocks. She likes municipal bonds, which are free of federal taxes, and investment-grade corporate bonds. Reinart also likes fixed income over dividend stocks for investors seeking income, since they are getting paid more with bond yields right now. He maintains a broad exposure to the fixed-income market, including corporate bonds and core bonds. Building buckets Chuck Failla, founder and CEO of Sovereign Financial Group and also a certified financial planner, breaks down clients' portfolios into buckets based on financial needs — and sticks with it. "We really think that you should never make any changes to your asset allocation in a reactionary way," he said. "If you're reacting to the market, in my opinion, it's already too late." "Your asset allocation should be driven by — when do you need to use that money," he said. Money earmarked for the next 12 months should not be in the stock market at all — and should instead be in a money market fund or certificates of deposit, he said. Money needed in one to two years typically is in 10% equities and 90% fixed income, he added. The bond portfolio should skew towards high-quality, short-duration assets, while the stock allocation should focus on blue chips and high-quality dividend payers with a proven track record of growing their payouts. For instance, the ProShares S & P 500 Dividend Aristocrats ETF is composed of companies that have grown their dividends each year for at least 25 years. NOBL 1Y mountain ProShares S & P 500 Dividend Aristocrats ETF year to date The next tranche of three to five years raises the equity portion to 30%, and for six to 10 years is a 50/50 split. However, that is where Failla is prone to shift allocations to 75% if there is a pullback in the S & P 500 and market conditions are right. Portfolios earmarked for use in 10 years hold up to 90% to 95% in equities and also includes allocations to alternative investments such as private equity and private credit. In the longer term buckets, more aggressive growth stocks can be added, he said.
CNBC
25-06-2025
- Business
- CNBC
Most Americans say this financial milestone makes you an adult
These days, it's common for parents to give their adult children some financial support. But it wouldn't take a lot to be considered independent. About three-quarters, or 76%, of Americans say that coming off a parent's cell phone plan is one of the "ultimate signs" of adulthood, according to a recent survey of over 2,000 adults by AT&T. Roughly two-thirds, or 66%, of those polled also say they believe adult children should aim to reach this financial milestone by age 21. However, of those who pay their own cell phone bill, most waited until age 27 — and 18% didn't start paying for their plan until age 40 or later, AT&T found. Here's a look at other stories affecting the financial advisor business. It makes sense that paying for a cell phone plan would be a telling sign of financial freedom for many young adults, according to Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. "Eventually they have to get their own car insurance because they can't stay on their parent's plan once they are no longer living them after they've finished school," said McClanahan, a member of the CNBC Financial Advisor Council. "At 26, they have to get their own health insurance. So it is not surprising that they stayed on the family phone plan as the last break for independence." Many experts argue it's harder today for young adults to make it on their own. "Separating from a parent's cell phone plan might seem minor, but it symbolizes something much bigger: financial independence and personal responsibility," said Douglas Boneparth, an CFP and the president of Bone Fide Wealth in New York. "In today's world, where young adults are often burdened by high living costs, student loans and delayed milestones like homeownership, even small acts of autonomy feel like major wins," said Boneparth, who also is a member of CNBC's Financial Advisor Council. According to J.D. Power, the average monthly cell phone bill is $144. In addition to soaring everyday expenses and housing costs, millennials and Generation Z face other financial challenges their parents did not at that age, other studies also show. Not only are their wages lower than their parents' earnings when they were in their 20s and 30s, after adjusting for inflation, but they are also carrying larger student loan balances. "'Adulting' isn't always about hitting big life events," Boneparth said. "Sometimes it's about taking ownership of the basics, like paying your own phone bill. These micro-milestones offer a sense of progress and control when other financial goals feel out of reach."
Yahoo
25-06-2025
- Business
- Yahoo
Gen X is the least financially secure generation — and most Americans say they need six figures to live comfortably
More than a quarter of Americans say they would need to be making at least $150,000 to feel financially secure, and more than three-quarters of Americans say they currently don't feel financially secure — especially those who belong to Generation X. More than three-quarters of U.S. adults say they aren't completely financially secure, which is up from 72 percent in 2023 and 75 percent in 2024, according to Bankrate's Financial Freedom Survey. While just over a quarter of Americans told Bankrate they would feel secure if they could make $150,000, a large percentage of respondents — 45 percent — said they need to make at least six figures before they could begin to feel secure. Feeling financially secure, as defined by Bankrate's survey, is the ability to 'cover your bills and everyday essentials but also have money left over for eating out and vacations.' That growing sense of financial instability is fueled by several factors. 'One major issue is that wages have been stagnant for a large majority of the population over that time, and prices continue to rise,' Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida, told Bankrate. 'Add that to the backdrop of political instability everyone is feeling, and I think that is a perfect formula for people not feeling financially secure,' she said, The cost of goods are not the only major expense on the rise. There's also child care, auto loans, home insurance, outstanding student loan balances, and of course, rent. While all U.S. adults are subject to these forces, Generation X may be one of the hardest hit. Gen Xers — people who are currently between the ages of 45 and 60 — have now been working for decades. But the oldest of that cohort is still at least seven years away from the retirement age. Bankrate's survey found that 84 percent of Gen Xers felt they weren't being paid enough to feel financially secure. The survey found that 80 percent of Generation Z respondents felt the same way, as did 79 percent of Millennials and 69 percent of Baby Boomers. According to a 2024 Experian survey, Gen X has experienced the most 'financial trauma' — defined by Trauma of Money author Chanel Chapman as emotional distress directly linked to monetary concerns and its impact on their relationships, families, and perspectives on wealth. In that survey, 74 percent of Gen X respondents said they were experiencing financial trauma, followed by 71 percent of Millennials, 64 percent of Gen Z, and 63 percent of Baby Boomers. Gen Xers are in the unenviable position of nearing the end of their careers while also having to care for children and aging loved ones and navigating the challenging modern financial landscape. Gen X was also in the prime earning years during the Great Recession, and were the first generation born after the broad elimination of pensions in the United States. In the Bankrate survey, 35 percent of Gen Xers said they would need to rake in at least$150,000 annually to feel financially comfortable, while 24 percent of Baby Boomers, 26 percent of Millennials, and 20 percent of Gen Zers said the same. While Gen X may be struggling the most, all the surveys show that more than half of all U.S. adults are feeling the pressure to make ends meet. According to Bankrate, rapid inflation over the last three years has undermined households' purchasing power, which makes it harder for Americans to afford their lifestyles on their current salaries. A salary of $100,000 in January 2020 has the same buying power as $124,353, according to Bankrate. That means that if the worker making $100,000 hasn't received a raise between 2020 and 2025, they've effectively lost $24,000 of their salary. But for the nearly 900,000 Americans who make minimum wage, reaching that six-figure benchmark for financial security may seem impossible, especially when pushes to raise the federal minimum wage fail to materialize. Today, 34 states and territories have minimum wages around the federal hourly minimum of $7.25 per hour. That rate has not increased since 2009. Five states — Alabama, Louisiana, Mississippi, South Carolina, and Tennessee — use the federal minimum wage, and three states have a lower minimum wage than the federal minimum. While the push for a $15 minimum wage was championed primarily by progressive voices like Sen. Bernie Sanders, the idea has gained broader momentum in Congress, even among some Republicans like Sen. Josh Hawley. Sanders attempted to add a provision raising the federal minimum wage to $15 in 2021 as part of Joe Biden's COVID-19 stimulus bill, but the effort was killed in the Senate. That same year, the National Low Income Housing Coalition's annual 'Out of Reach' report found that minimum wage workers in 93 percent of U.S. counties would not be able to afford a modest one-bedroom apartment. But even moderate raises aren't going to go far enough to reduce the financial pressures facing modern American adults. The current typical national salary for a full-time, year-round worker was $81,515 in 2023, according to the latest figures from the Bureau of Labor Statistics. Typically, the more direct path toward making more money is switching jobs, but even that avenue has become more difficult for many workers. Many companies have slowed or stopped hiring, making it that much harder for Americans to increase their salaries. The financial realities of the modern world are a far cry from the idyllic American Dream — that an American who works a full-time job can afford a home, transportation, raise their children, and have enough left over to enjoy their lives — and that reality doesn't seem to be changing anytime soon. 'Though many Americans hold onto the idea of returning to a 1950s-era 'Golden' America age, the days when a single, non-college educated breadwinner could sustain an entire family seem like they may be confined forever to the past,' Bankrate economy reporter Sarah Foster said.
CNBC
23-06-2025
- Business
- CNBC
Here's the salary Americans say they now need to earn to live comfortably
With higher prices now firmly entrenched, and President Donald Trump's tariffs fueling inflationary concerns, most Americans say they need an income boost to get by, according to a new report. Nearly half, or 45%, of all adults said they would need to make $100,000 or more a year to feel financially secure, Bankrate's financial freedom survey found. Roughly one-quarter, or 26%, said they need to make $150,000 or more. Fewer — 16% — put the bar at over $200,000. By comparison, the median household income in 2023 was a little over $80,000, according to the latest U.S. Census Bureau estimates. Altogether, the share of Americans who said they do not feel completely financially comfortable rose to 77% in 2025, up from 75% in 2024 and 72% in 2023, according to Bankrate's survey, which polled more than 2,200 in May. Here's a look at other stories affecting the financial advisor business. While Americans might have different definitions of what living comfortably entails, being in "a financial sweet spot," often means "you are able to cover your bills and everyday essentials but also have money left over for eating out and vacations," said Bankrate's economic analyst Sarah Foster. However, the recent period of high inflation and economic uncertainty has chipped away at most consumers' buying power, according to Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. "One major issue is that wages have been stagnant for a large majority of the population over that time, and prices continue to rise," said McClanahan, who also is a member of CNBC's Advisor Council. "Add that to the backdrop of political instability everyone is feeling, and I think that is a perfect formula for people not feeling financially secure." Further, households are also facing surging child-care expenses, ballooning auto loans, high mortgage rates and record rents along with the resumption of student loan payments. But a deterioration of the American dream has been decades in the making, according to Bankrate's Foster. "It starts long before the pandemic," she said. "There has long been this perception that we used to be in this golden age where you could own a home, a car, and get by on a single income — that is a bygone era." A separate survey by Edelman Financial Engines from 2024 had similar findings: 58% of adults said they would need to earn $100,000 on average to not worry about everyday living expenses, and one-quarter said they would need to earn more than $200,000 to feel financially secure. In most cases, feeling financially secure is not based on how much you earn, but rather a commitment to save more than you spend and maintain a well-diversified portfolio, experts often say.
CNBC
17-06-2025
- Business
- CNBC
90% of women investors say they're 'on track' to achieve money goals — but most share a common regret, survey finds
Women who invest began at an average age of 31, but most wish they had started putting money in the market earlier, a recent survey said. Nearly all — 90% — of the women investors surveyed said they're "on the right track" to achieve their financial goals, according to the survey, by Charles Schwab, an investment and financial services firm. However, 85% share a common regret — they said they wish they had started investing at an earlier age, the survey said. When the age is broken down by generation, Schwab found that millennials began investing at age 27, on average, Gen Xers' average starting age was 31, and baby boomers started at an average age of 36. Here's a look at other stories affecting the financial advisor business. Schwab polled 1,200 women in the U.S. ages 21 to 75 in January. The report said they each had at least $5,000 in investable assets, not including retirement accounts or real estate, and were all primary or joint household financial decision-makers. Some of the top reasons respondents said they began investing later in life than they would have liked were a lack of financial knowledge, 54%, and limited funds to invest, 53%, according to Schwab's report. There's an advantage in getting started with investing as soon as you can, even if you don't have much to contribute at first: You'll benefit from time in the market, according to Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida. "Start saving while you're young because you have lots of years for your money to grow," said McClanahan, a member of CNBC's Financial Advisor Council. An early start to investing harnesses the power of compounding. Compound interest means your money earns interest on both the original amount you invest and on the interest you've already earned, said Jeannie Bidner, a managing director and head of the branch network at Charles Schwab. Compound returns are broader, and typically include other types of investment gains, such as dividends and capital gains. Compounding creates a "snowball effect" for your cash, she said. "The sooner you get started, the better." Let's say a person begins at age 25 investing $6,000 per year, with an average 7% annual return. By the time they're 67 years old, the account balance would be almost $1.5 million, according to Fidelity Investments. If that individual delays starting to invest until age 30, they would end up with just over $1 million by retirement. In other words, that five-year head start offers a bonus of nearly half a million dollars. It's not just about getting a head start. Staying invested through major market swings and sticking to your plan are essential to meeting your financial goals. More than half, or 58%, of the women in the survey said they learned to stay invested despite the ups and downs of the market, Schwab found, and 42% said they learned to create a plan and stick to it. While market volatility can "feel like you're at a casino," it's important to disregard the major swings and focus on your long-term outlook, Katie Gatti Tassin, author of "Rich Girl Nation: Taking Charge of Our Financial Futures," said at an event Wednesday at 92NY, a cultural and community center in New York. "It's not a get-rich-quick scheme, it's a get-rich-slowly scheme," Gatti Tassin said.
