Morning Market Preview for September 30th, 2024

In today’s rapidly changing financial landscape, keeping a close eye on your finances is more important than ever. Managing your financial health starts by knowing your financial health. A doctor takes a patient’s vital signs, no? It’s time people had an affordable way to know their financial vital signs.

This is where Financial Health Monitoring & Alerts come into play, and Arena Investor, in partnership with the innovative Elements app, is here to provide a comprehensive solution, so you can learn, understand, and improve your financial health – along a journey you can actually enjoy!

‍What is Financial Health Monitoring & Alerts?

Financial Health Monitoring & Alerts is a service provided by Arena Investor that tracks various aspects of your financial life, from spending and savings to investment and debt levels. It gives you accurate insights into the most important financial ratios and key factors that make up one’s financial health. 

With the integration of the Elements app into Arena Investor’s platform, we’re taking this service to the next level. The Elements app is designed to give you a structured, visual approach to understanding your financial picture. It breaks down your financial data into key components—such as income, assets, liabilities, and cash flow—providing you with a clear and comprehensive view of your financial health.

‍So what is Alerts?

With Alerts you get notifications each month when one or more of your financial health vital signs become excellent or concerning. No more guessing how you’re doing. No more wishing you had a teammate monitoring your progress and alerting you to something that needs your attention. Now, you have a vigilant teammate ensuring you stay the course on a healthy financial journey.

Why Financial Health Monitoring is Essential

In the modern financial environment, it’s easy to lose track of where your money is going. Financial Health Monitoring & Alerts is crucial because it allows you to stay on top of your finances in a proactive manner. Instead of reacting to financial issues after they arise, you can address them before they become significant problems.

‍The Role of Alerts in Financial Health Management

Alerts are the cornerstone of effective Financial Health Monitoring. They act as a financial guardian, constantly scanning your accounts and transactions to identify any issues that may require your attention. 

The Elements app enhances this by categorizing your financial life into easily understandable “elements” and providing alerts when certain thresholds are crossed. Whether it’s a budget overspend, a savings shortfall, under-investing in tax-advantaged accounts (and therefore not reducing your tax bill or optimizing your retirement) an Arena Investor representative  will notify you, so you aren't the last one to know your financial health is off-track.

Elements helps you stay on top of your financial game.

Some common types of alerts include:

- Budget Alerts: Notifications when your spending exceeds set limits.
- Savings Alerts: Reminders when you’re behind on savings rates or celebrations when you hit a milestone.
- Investment Alerts: Warnings when your equity rate is too low.
- Debt Alerts: Notifications when debt rate becomes too high or you pay-off debt and can celebrate the accomplishment.
- Insurance Alerts: Get alerted if your insurance rate is too low and you may be vulnerable, or if it is too high and you’re overspending for the coverage.
- Liquidity Alerts: Notifications if you have too little cash, or cash-equivalent assets
- Total Term Alerts: Know how many years you can live in retirement based on your current financial situation!

Benefits of Integrating with the Elements App

1. Proactive Financial Management: By continuously monitoring your finances and alerting you to potential issues, Arena Investor allows you to manage your money proactively. You’re empowered to make adjustments before small issues become major setbacks.

2. Visual Financial Planning: Elements breaks down complex financial information into visually engaging and easy-to-understand components, making it simpler to see where you stand financially and what steps you need to take to improve your situation.

3. Personalized Insights: With the combined power of Arena Investor’s Financial Health Monitoring & Alerts and the Elements app, you receive insights tailored to your specific financial situation. Whether you’re saving for a home, planning for retirement, or managing a complex investment portfolio, the platform provides guidance that aligns with your goals.

4. Stress Reduction: Finances can be a major source of stress, especially when surprises arise. With Financial Health Monitoring & Alerts, supported by Elements, you gain peace of mind knowing you’re always informed and prepared.

5. Improved Financial Discipline: Alerts from Arena Investor help you stay disciplined in your financial habits, whether it’s sticking to a budget, contributing to savings, or managing debt.

Who Should Use Financial Health Monitoring & Alerts?

Financial Health Monitoring & Alerts, especially when enhanced by the Elements app, is beneficial for anyone looking to take control of their financial future. It’s particularly valuable for those busy individuals who know they should be doing better with their money but don’t have the time, or simply want better work-life balance. 

Finding Better Balance

In today’s dynamic financial environment, staying informed and proactive about your finances is crucial. Arena Investor’s integration with the Elements app for Financial Health Monitoring & Alerts offers a powerful way to stay on top of your financial health. By providing insights and alerts, this service helps you manage your money more effectively, avoid potential pitfalls, and achieve your financial goals with confidence.

At Arena Investor, we are committed to providing our clients with the best tools and resources to secure their financial futures. With the integration of the Elements app into our tech stack, we’re offering a modern, comprehensive approach to Financial Health Monitoring & Alerts. Whether you’re looking to save for a major life event, optimize your investment strategy, or simply gain a clearer understanding of your financial situation, Arena Investor, with Elements, is here to help you every step of the way.

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

Arena Investor is Modern Planning and Investing Built for The One in the Arena – the busy, hard-working professionals who know their money needs more attention but don’t have the time, or simply want better work-life balance.

The Power of Dividend Investing: A Path to Financial Freedom for Generations

  Whether you're about 30 looking to make work optional in your 50s, in your 40s preparing for retirement, or setting up a secure financial future for your children, dividend investing can help you achieve your goals. Through the power of compound growth and smart investment strategies, it’s possible to build wealth that supports early retirement, funds major life events, or helps with educational and housing expenses for future generations.

  In this article, we’ll explore how maximizing contributions to a 401(k), an individual investment account, or a minor account can help secure financial independence for yourself and your children. We’ll show how each of these investment vehicles, guided by the expertise of an Arena Investor Advisor, can set you on the right financial path over the next 20 years.

The Power of Compounding Dividends

  At the heart of dividend investing lies compound growth. By reinvesting the dividends your investments earn, you accelerate your portfolio’s growth over time. As those reinvested dividends purchase more shares, your portfolio grows, and each new share generates even more dividends—creating a snowball effect. 

  For example, a portfolio of dividend-paying stocks growing at an average annual return of 7-8% can more than double in value in just 10 years. The longer your investments remain in place, the more powerful the compounding effect becomes, which is why dividend investing is such an effective strategy for long-term wealth building.

  Let’s explore how this works in three different scenarios.

Scenario 1: Use an Individual Account to Retire or Work Less in 20 Years

  If you're about 30 and dreaming of retiring or working less by age 50, setting up and contributing to an individual investment account focused on dividend stocks can help you achieve that goal. Unlike a 401(k), individual accounts don’t have contribution limits or restrictions on when you can access your funds, making them more flexible for those targeting early retirement.

  By contributing regularly to an individual account and reinvesting dividends, you can take full advantage of the power of compounding. Here’s how the numbers play out:

- Annual contribution: $23,000 (same as in a 401(k) for consistency)

- Assumed annual growth rate: 7%

- Time horizon: 20 years

  After 20 years of consistent investing and reinvesting dividends, your portfolio could grow to approximately $1.02 million.

The Math:

- Contributions over 20 years = $23,000 × 20 = $460,000

- With 7% annual growth and reinvested dividends, the total grows to over $1 million.

  If you want to stop working or reduce your hours at age 50, this portfolio could provide a significant income stream. For instance, a 3% dividend yield on a $1 million portfolio would generate $30,000 per year in passive income. Combined with other savings or income sources, this could give you the financial flexibility to enjoy more freedom or semi-retirement.

Scenario 2: Maximize Your 401(k) in Your 40s for Retirement

  If you’re in your 40s you should be thinking about retirement, and maximizing your 401(k) contributions is one of the most effective ways to build your retirement savings. The contribution limit for 2024 is $23,000 for employees under 50, and an even higher limit of $30,500 if you’re 50 or older.

  By consistently contributing the maximum amount and focusing on dividend-paying stocks, you can take advantage of compound growth over the next 20 years, positioning yourself for a comfortable retirement.

The Math:

Same as above, a 3% dividend yield on a $1 million portfolio would generate $30,000 per year in passive income.‍

Except this time the income is coming from a 401k, and you are older than 59 ½. If we use a Roth 401k, then you will not owe any taxes on the withdrawals.

This kind of monthly cash flow is an amazing component of a healthy retirement plan, and a retirement you can truly enjoy.

Scenario 3: Set Up a Minor Account for Your Children’s Future

  If you're a parent looking to set your children up for financial success, creating a minor account (often called a custodial account) and investing in dividend-paying stocks can help them cover major future expenses, such as college debt, a down payment on a home, or other significant financial milestones.

The Math:  

Again, the math is the same as above, a 3% dividend yield on a $1 million portfolio would generate $30,000 per year in passive income.‍

Say you fast forward in time and your child’s family has $100,000 in student loan debt, will be getting married in the upcoming years, and will be purchasing their first home a few years later.

This portfolio could be used to pay off student loan debt and then fund a wedding and then fund a down payment on a first home. And then fund whatever life has to offer for that family as the years go by.  ‍

The 3% dividend yield on $1 million would produce $30,000 annually in passive income—and the $1 million dollars is never spent. It keeps generating $30,000 annually indefinitely. The money can both support them in covering expenses every year, or continue to be reinvested for long-term wealth building – in turn yielding even more money annually once needed again.

Inflation Protection: Stocks as a Hedge Against Inflation

  One of the biggest challenges long-term investors face is inflation, which erodes the purchasing power of your money over time. Fortunately, investing in stocks—particularly dividend-paying stocks—can help protect your portfolio from inflation.

  Stocks are historically one of the best hedges against inflation because companies can raise prices to keep pace with rising costs, which in turn can boost revenue and profits. As a result, stock prices tend to rise with inflation, helping to preserve the purchasing power of your investments. Additionally, many dividend-paying companies increase their dividends over time, providing a growing stream of income that keeps pace with inflation.

  For example, let’s say inflation averages 2.5% annually over the next 20 years. A well-managed dividend stock portfolio that grows at 7-8% per year not only compensates for inflation but also provides significant real returns. Additionally, with a diversified portfolio of stocks, your investment is spread across different sectors, many of which may benefit from inflationary pressures (such as energy, consumer goods, and healthcare).

Why Work with an Arena Investor Advisor?

  While dividend investing and compounding growth are powerful, they work best when paired with professional portfolio management. This is where an Arena Investor Advisor can help. Managing a dividend-focused portfolio—whether in a 401(k), individual account, or minor account—requires careful stock selection, regular monitoring, and periodic rebalancing to ensure the portfolio remains aligned with your goals.

An Arena Investor Advisor will:

- Optimize Dividend Income: By selecting high-quality, dividend-paying stocks with solid growth potential, your advisor ensures that you’re maximizing both income and capital appreciation over time.

- Monitor Market Conditions: Investing involves navigating market fluctuations. Your Arena Investor Advisor will actively manage your portfolio to ensure that it performs well, even in volatile markets.

- Reinvest Dividends Strategically: Reinvestment is key to compounding, and your advisor will make sure that dividends are reinvested in the most effective way to fuel long-term growth.

- Adjust for Inflation: As inflation shifts, your advisor will adjust your portfolio to ensure you remain in stocks and funds that are strong inflation hedges, helping your wealth grow in real terms.

- Adjust for the Spending Years: As noted in the examples above, the portfolio would need to be adjusted down to the 3% annual yield, as a preservation measure for the principal. That adjustment can be professionally made by an Arena Investor Advisor as well.

The Key Takeaway: Start Now and Maximize Your Contributions

  Whether you're about 30 planning to make work optional by age 50, in your 40s preparing for retirement, or looking to create a financial foundation for future generations, dividend investing is a powerful tool for long-term wealth building. By maximizing your contributions to a 401(k), individual account, or minor account—and by working with an Arena Investor Advisor—you can take full advantage of the power of compounding dividends and inflation protection.

  Starting today ensures you’ll be well on your way to achieving your financial goals in 20 years, whatever they may be.

And remember:

  Dividend income is passive income and passive income is taxed significantly less than active income, so you’ll keep more of the $30,000 passive income each year than you would if it was active income, like W2 / employee income.

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

Ready for professional advice?

• Enjoy 8-minute onboarding and a follow-up chat (click here)

What's on your mind financially?

• Schedule a free 20 minute intro meeting (click here)

• Or simply text/call us at 614-350-1902 with any questions

You’re the Hero.
    We’re the Guide.

‍

Arena Investor is modern planning and investing built for the busy, hardworking professionals who know their money needs more attention but don't have the time, or simply want better work-life balance

Good morning, Heroes!

Here’s your Morning Market Preview for September 20th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!

Key Economic Reports

• None scheduled for Friday.

Key  Earnings Reports & Events Today

• No earnings reports scheduled for Friday either.
  
  
• Boeing’s strike continues, and the company has furloughed thousands of workers. The strike began after union members overwhelmingly rejected a proposed contract, leading to a work stoppage that is now becoming prolonged. The strike began on September 13th.

The Fed

• After the recent 50 basis points cut to 4.75-5.00%, the next meeting's outcomes will hinge on new data, potentially setting further rate adjustments.

Stocks

Year-to-Date Performance:

• Up Most: Tech was up 3.08% yesterday, now up 24.26% this year. Utilities is second-best on the year, up 23.03%.
  
  
• Down Most: Important to know, no sectors are negative on the year. The smallest gain has been in Energy, up 4.77% this year. Second-to-last is Materials, up 8.68%.

5 Day Moving Average: 

• Up Most: 95% of Energy Large Cap stocks are now above their 5 day average. Tech is second now with 88% of its Large Caps above their 5 day average.
  
  

• Down Most: Utilities are down, and only 16% of Large Caps are above their 5 day average. Next closest is Real Estate and Consumer Staples at 29%. 

Crypto

• Bitcoin: Up big recently, now about $62,992, which puts it at a staggering 49.89% gain on the year.
  
  
• Ethereum: It’s been a good couple of days for Ethereum again, and is up to about $2,465, which means a 7% gain on the year.
  
  
• Top Gainers Recently: Solana is up big again, about 9.82% in the last day. Ox and Bitcoin Cash are close on Solana’s heels though, both up about 9.25%.
  
  
• Important to note: Crypto markets are always open and prices change constantly.

Bonds

• 2-Year Treasury:  Yields continue to come down, now at 3.629%.
  
  
• 10-Year Treasury: Up a tick to 3.715%, but overall it’s had a decline this year too.
  
  
• The yield curve is no longer inverted, having un-inverted in late August, 2024.

Gold

• Price: Gold is flat in the last day, now about $2,587 per ounce, and up 25.4% on the year.

Real Estate

• 30-Year Fixed Mortgage Rate: Up just a bit, now to 6.17%. The mortgage rate has dropped about 7.5% this year.

Geopolitical Aspects

• Global markets are watching closely for economic data from China, which continues to show slower-than-expected growth.
  
  
• Meanwhile, European markets are grappling with high energy prices as winter approaches, which could lead to higher costs and increased inflation risks across the continent.
  
  
• Concerns include Middle East tensions affecting oil prices and global investment flows.

‍

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

P.S.

Continue reading, if you would enjoy…

Some Simple Explanations of Key Concepts to Level Up Your Financial Education

Each of these elements interacts, creating the dynamic we call 'the market'.

Understanding these aspects of the investing arena can help investors in making informed investment decisions.

You’re the Hero.
    We’re the Guide.

• Economic Reports: Data like jobless claims help predict economic health. For instance, rising claims might suggest economic slowdown.
• Jobless Claims: These are weekly reports that show the number of people filing for unemployment benefits. Higher numbers can indicate a weakening labor market.
• Housing Starts: This measures the number of new residential construction projects and is a key indicator of real estate market health.
• The University of Michigan's Consumer Sentiment Index measures consumer confidence through surveys, reflecting optimism or pessimism about personal finances and business conditions.
• Federal Reserve Rate Decisions: The Fed adjusts interest rates to either stimulate the economy (by lowering rates) or control inflation (by raising rates). Rate cuts can make borrowing cheaper, while rate hikes aim to curb inflation.
• Treasury Yields: The return on U.S. government bonds, often used as a measure of investor sentiment about future inflation and economic growth.
• Stock Sectors: Different sectors thrive in different economic conditions. Tech might boom during innovation, while energy could struggle with green shifts.
• Bonds and Yields: Bonds are safer than stocks but yield reflects risk or inflation expectations. Higher yields could mean investors demand more return.
• Cryptocurrency: Digital currencies like Bitcoin and Ethereum have been volatile but offer significant returns in 2024.
• Gold: A traditional safe-haven investment that often rises during times of uncertainty or when inflation is high.
• Real Estate: Influenced by rates, economic health, and demographic trends. Lower rates can inflate home prices due to increased buying power.
• Mortgage Rates: Higher rates make borrowing more expensive, which can cool down housing demand and affect real estate prices.
• 1 Basis Point (BPS) equals 0.01%. It’s easier to say “5 bips” than it is to say “zero point zero five percent.”