Skip to main content
Monthly Archives

September 2023

Donna Cournoyer
In Reading Recommendations

The Education of a Coach

The Pulitzer Prize winning author David Halberstam is well known for his work as a New York Times reporter who challenged the upbeat news coming from the United States mission in South Vietnam, and for his book The Best and Brightewherst, which focuses on the consequences of US foreign policy in Vietnam during the Kennedy administration.

In total, Halberstam wrote twenty books before his accidental death in 2007, seven of which covered personalities and events in sport. The last of his sports books, and only one focused on football, was The Education of a Coach, about Patriots Head Coach Bill Belichick.

In the introduction to the book, David Maraniss discusses some elements of football that disturbed Halberstam, including “the cultural hyperventilation that transformed the sport from recreation to religion” and “the overwhelming pile of money that made it a business more than a game”.

Despite its detractions, football displays feats of human speed, strength, and athletic skill. Maraniss tells us Halberstam was captivated by this. And through the book, Halberstam attempts to understand Belichick’s traits of excellence and originality which he uses to lead others, build cohesive teams, and affect positive outcomes.

For those of you who enjoy the game, and who count yourselves as Patriots fans, here’s hoping those traits will inspire New England’s team as we enter a new football season.

-RK

Donna Cournoyer
In College Planning

Ready, Set… Wait for the New FAFSA

Roughly 18 million college students apply for financial aid each year through the Free Application for Federal Student Aid. The U.S. Department of Education develops the FAFSA form and disburses aid to students at 5,600 colleges and career schools each year.

The FAFSA is also used by colleges and universities to determine eligibility for their own free grants and scholarships.

Due to the implementation of extensive changes based on the FAFSA Simplification Act, the Department of Education delayed the usual October 1 launch date to December this year for the 2024-2025 application. The exact date has not yet been released.

Changes to the form began over the last three years and some of the more impactful changes will occur on the 2024-2025 FAFSA form.

What this means for students who are applying now to college for admission for the fall of 2024 or who are current college students, is that their aid eligibility may be affected. Some changes are expected to help students, and some are expected to have a negative impact on eligibility.

It also means that schools which have historically released earlier financial aid offer letters to freshmen applicants, will likely be scrambling to review the FAFSA applications once the form opens and may have to delay their offer notifications to freshman.

Some of the FAFSA changes that may have a negative impact on student eligibility are:

  • The number of family members in college is no longer a factor in the need analysis. The “sibling discount”, which could make a student eligible for more aid, is going away. However, based on comments from administration officials from a sampling of schools that use the CSS Profile, many colleges likely will continue to give some form of sibling discount.
  • The net worth of a business is no longer limited to those with more than 100 full-time employees. Applicants must report the net worth of all businesses.

Some of the FAFSA changes that may have a positive impact on student eligibility or be a benefit to students are:

  • The FAFSA will have significantly fewer questions.
  • The FAFSA EFC (Expected Family Contribution) name has changed to FAFSA SAI (Student Aid Index) which helps avoid confusion as this number is for determining eligibility and is not associated with what a family or student “is expected” to pay.
  • Some untaxed income items have been eliminated such as: payments made to tax-deferred pension and retirement plans that are paid directly or withheld from earnings; money received by or paid for on behalf of the student; and veterans’ noneducational benefits.
  • For dependent students, education savings accounts will only be counted as a parent asset if the account is designated for the student. Previously, if a parent had education savings accounts for other children, the value of those were also required to be counted.
  • Students may now list up to twenty colleges on the form, rather than the previous ten.

One important outcome of the FAFSA change is unclear: how schools will adjust aid (or not) for current students. Students and families will have to wait and see how the new FAFSA, and their school’s policy changes, will affect their financial aid for their remaining college years.

One Final Note about the FAFSA Form: every student should complete the FAFSA form. Free money can be left behind if a student does not submit the form, especially in year one.

Some colleges require the form to be submitted to qualify for a merit scholarship, even though it is not need-based. Also, some colleges award additional grants in the form of free money, just for completing and submitting the FAFSA, regardless of eligibility.

You can register here for an FSA ID and use the same link to complete the FAFSA when the application opens.

Parents of students applying for admission for Fall of 2024 can use the Net Price Calculators on their schools’ websites to get an idea of eligibility before the FAFSA becomes available.

You can also receive a College Money Report (for three schools on your list) by visiting the Resources page on the Moore Financial Advisors website.

We will post updates on the FAFSA release date when they are available.

 

 

Donna Cournoyer
In Personal Data Security

How to Play Digital Defense and Protect Your Personal Information

US Consumers lost $8.8 billion to financial fraud last year, up 44% from 2021, according to a recent Bloomberg News article. And cybercrime costs worldwide are set to grow to $19.5 trillion by 2025.

The Federal Trade Commission notes hundreds of thousands of cases where individuals have reported losing at least $1,000, as the chart below shows.

Many of us have been affected by cyber crime, either directly or indirectly by way of a relative or friend. Knowing what steps to take to create a more secure digital environment can give you greater peace of mind and hopefully allow you to avoid being scammed.

Here’s our Top Ten List for Playing Digital Defense and Protecting Your Personal Data:

  1. Use Strong, Unique Passwords: use a different password for each online account and consider using a reputable password manager to generate and store your passwords securely.
  2. Enable Multi-Factor Authentication (MFA): this adds an extra layer of security by requiring you to provide a second form of verification (e.g. a text message code) in addition to your password.
  3. Regularly Update Software and Apps: this helps to keep your computer and phone operating systems, software applications, and antivirus programs up to date.
  4. Use Secure Connections: ensure websites you visit have a secure connection (look for “https:// and a padlock icon in the address bar).
  5. Be Cautious with Emails and Links: verify the sender’s authenticity before clicking on links or downloading attachments, and don’t provide sensitive information through email unless your email is encrypted.
  6. Limit Your Data Sharing: be mindful of information you share on social media platforms and adjust your privacy settings to limit who can see your personal information.
  7. Monitor Your Financial Statements: regularly review your bank and credit card statements for unauthorized transactions and report suspicious activity immediately.
  8. Regularly Check Your Credit Reports: request free annual credit reports from each of the three major credit bureaus (Equifax, Experian, and Transunion).
  9. Freeze Your Credit: consider freezing your credit with the credit bureaus; this makes it more difficult for identity thieves to open new accounts in your name.
  10. Consider Using a Virtual Private Network (VPN): this provides an extra layer of protection when you access information through publicly available sources; using a VPN (provided by a vendor) makes it harder for observers to identify you and track your online movements.

Conducting an annual personal cyber safety audit is a worthwhile endeavor. It will help you determine if you’re at risk of having your identity stolen or becoming a victim of fraud. Here’s a checklist that will help you conduct your personal audit and improve the way you play digital defense.

RK

Donna Cournoyer
In Investment Strategy

Interest Rate Football

The Olympics captures our imagination. It is built on dreams, wrapped in narrative, fueled by drama, and played on the world’s athletic stage. If we were to draw an analogy to the financial world, the Olympics lines up well with the stock market. It holds the promise of the thrill of victory, and at times delivers the agony of defeat.

Football, on the other hand, demands our attention. It is persistent, visceral, and woven into the fabric of American society. Extending the financial analogy, football is akin to interest rates and the bond market. You might fully engage, casually observe, be perplexed or uninterested, but it’s difficult to completely ignore.

The owners of the thirty two NFL teams set the rules of the game. Similar to the football team owners, the twelve members of the Federal Reserve’s Federal Open Market Committee (FOMC) set interest rate policies that affect the level of interest rates and influence bond returns.

The FOMC is now suggesting that policy may soon shift from ‘hike’ to ‘hold’. If this is the case, short-term interest rates, which are currently at 5.5% and which have been on an upward path since 2021, could stabilize in the near future.

The managers of large bond mutual funds and ETFs function like NFL coaches. They call the shots for their respective funds (teams) and decide which bonds (players) to hold and which to trade.

Several large fund managers have been encouraging financial advisors to add longer-term bonds and bond funds to their clients’ portfolios.

Vanguard, the well-known firm in Pennsylvania, claims “opportunities in bonds abound”, and “now is the time to add high-quality bond exposure.” PIMCO, the California-based bond specialist, proclaims “Bonds are back” and recommends investors “make the most of this compelling opportunity”.

And the world’s largest asset manager, New York based BlackRock says “the Fed should be done” and it’s Chief Investment Officer for Fixed Income says “You can put your shoulder behind a bit more of interest rate (bond) exposure.”

The bond fund managers are making strong statements, with conviction, and backed by experience. But like NFL coaches who are advocates for their teams, these bond fund managers are prone to offer positive prognostications for their funds.

My bias is to proceed with skepticism and caution regarding the “opportunities” offered by intermediate- and long-term bond funds. Why?

  • Interest rate cycles tend to unfold over years, rather than weeks or months
  • Bond rates are still adjusting from all-time Pandemic-era lows
  • Bonds with the shortest maturities, and lowest risk, today offer the highest yields

The picture below, courtesy of JP Morgan Asset Management, is one that I’ve shared with you previously. When thinking about interest rate risk in client portfolios, I keep this image at the forefront of my mind.

The blue line in the chart displays the nominal yield of the 10-year Treasury bond over time. Today’s 10-Year Treasury bond pays just over 4% annually. Although the yield is significantly higher than what was on offer during the early days of the pandemic, it sits well below the long-term average yield of 5.76%.

And with inflation still above 4%, currently there is no inflation-adjusted compensation being offered by longer-term Treasury bonds. The grey line, depicting inflation-adjusted ‘real yields’, shows this.

The risk for bond investors who take on more intermediate- and long-term bond exposure is that interest rates continue on an upward path.

For example, if 10-year interest rates were to move higher by another 1 percentage point, to 5%, this would translate to a price decline of about 8% for 10-year Treasury bonds. The bond holder (or bond fund holder) would still receive interest over time, but the bond price would need to fall to make up for the jump in interest rates.

The bottom line: play bond defense. The interest rate environment remains unsettled. Shorter-term bonds and shorter-term bond funds are a safer option when inflation is elevated and interest rates are trending higher. Today, investors get more yield by taking less interest rate risk.

The adage “the best defense is a good offense” is attributed to George Washington and often repeated by football commentators. Sometimes, though, the best defense is simply achieved by playing defense.

 

 

Donna Cournoyer
In Market Updates

August 2023 Market Recap: Summer Slump

The financial markets entered a summer slump in August.

The US government debt rating downgrade by Fitch Ratings was the initial catalyst for higher Treasury yields (and lower prices) early in the month. Minutes from the Federal Reserve’s July meeting, where interest rate policy is set, were released in mid-August and supported the narrative that central bank officials won’t be in a rush to bring rates down any time soon.

Market participants’ interpretation of the Fed’s interest rate policy kept the pressure on bond yields and hurt returns.

For August, the Bloomberg US Aggregate Bond Index fell by 0.63%. Through the end of August, the US bond market return year-to-date was still positive at 1.6%.

Higher bond yields took some of the summer heat out of stocks. For the month of August, the S&P 500 index of large company US stocks fell by 1.63%. Foreign stocks sold off by 3.9%.

Year-to-date, though, stocks are still significantly in the black. US stocks gained 18.7% and foreign stocks were up by 10.9% as of August 31.

Below is a summary of August returns.

RK

Close Menu