​As we all know the investment industry is filled with jargon and multiple types of accounts such as a Roth IRA, Traditional IRA, Rollover IRA, Inherited IRA, SIMPLE IRA, SEP IRA, and many more.  As stated in the name of the blog post, we will focus on one type, the Roth IRA.  At LBW, a frequently asked question is: “Should I contribute to a Traditional or Roth IRA?”.  More often than not, people are not as familiar with Roth IRAs as they are with Traditional IRAs.  So, we are going to break down the Roth IRA into four sections: History of the Roth IRA, Advantages of a Roth IRA, Roth IRA vs. Traditional IRA, and Why and What the Government Wants to Change.

​How LBW See’s It​
The first quarter of 2016 did not disappoint.  The S&P 500 hit a quarter low on February 11, 2016 equating to an approximate decline of -10%[1], falling to what pundits call a correction.  How did the S&P 500 finish the quarter?  Up approximately 1%[2].  In short, we experienced more than a 10% swing during LBW’s first full quarter - what a ride.  The swing was caused by the usual suspects: the continuing commodity rout, the strengthening U. S. dollar, the unpredictable Federal Reserve’s (“Fed”) interest rate moves, and continuing fears of a global slowdown.  Was this volatility valid, or in other words, was the market overvalued on a valuation basis?

​Let it be known, we had to look up how to review a movie.  Remember, we are not professional spellers (if you recall the last LBW INSI”G”HTS) nor professional movie critics, although we try our best!

Summary:​
“In 2008, Wall Street guru Michael Burry realizes that a number of subprime home loans are in danger of defaulting. Burry bets against the housing market by throwing more than $1 billion of his investors' money into credit default swaps. His actions attract the attention of banker Jared Vennett (Ryan Gosling), hedge-fund specialist Mark Baum (Steve Carell) and other greedy opportunists. Together, these men make a fortune by taking full advantage of the impending economic collapse in America."[1]


[1] http://www.imdb.com/title/tt1596363/plotsummary

​Working in the financial services industry requires significant trust.  Unfortunately, too often that trust is, at least initially, one-sided where the client places their trust in the advisor.  In the wake of the 2008-09 financial crisis’ recovery, and recent misappropriations such as Bernie Madoff’s Ponzi scheme, it is understandable for clients to find it difficult to trust their finance professionals.  That trust needs to be established over time, but it must begin as a two-way street and on an appropriate foundation.

​How LBW See’s It
2015 was full of notable events: American Pharaoh captured the Triple Crown, the new Star Wars movie was released, and the Federal Reserve (“Fed”) increased the federal funds rate for the first time in nine years.  The Fed had been indicating an increase was imminent throughout the year as they continued to see increased productivity in the US economy.  On December 17, 2015, the federal funds rate increased by a quarter of a percent from 0.25% to 0.50%.  Chair Janet Yellen specified that future increases will be gradual in nature and likely be below their normalized projection for some time.

The new year is upon us and what a start it has been for the markets. The market has declined significantly in the first week of 2016 with the Dow -6.21%, S&P 500 -5.98%, and the NASDAQ -7.26%*.

2015 was full of uncertainties and 2016 is no different. China, the world’s second largest economy, seems to be slowing with the government setting a target growth rate of 6.5% for 2016, half of what it was in 2010 (Driebusch, Corrie & Gold, Riva. “China’s Woes Reverberate”. The Wall Street Journal 8 Jan. 2016: A1-A8. Print). Oil prices continue to drop to levels not seen for some time and the Federal Reserve has set a policy to raise rates; however, it is unclear how fast it will happen. We are currently riddled with the unknowns and simply put, uncertainty in the short term creates volatility. So, what should you do during such turbulent times?

​Saving money is a difficult task.  Even though I am a Registered Investment Advisor, I still fall into the temptations of spending a few bucks on fishing lures.  In order to curb such temptations, I view savings in a different light.  Savings should be looked at as a non-discretionary expense, or a need such as your rent, when developing a personal budget.  In simple terms, savings is an expense.  If you build savings into your budget, you are automatically saving money thereby allowing you to spend additional excess cash flows on items like fishing lures.  

​Budgeting and dieting are similar in many ways.  As you drive home you make the decision: stop at the closest fast food restaurant or go home to cook steamed vegetables and chicken.   One is quick and easy and tastes great; the other takes time, and depending on your cooking skills, may not be the best.  As with your food dilemma you have constant emails with the phrase “50% off…valid for 24 hours”.  We are surrounded by temptations and sometimes it is difficult to resist (I will admit, I fall victim as well).   If you truly want to change you’re spending habits, follow these five steps.