Day: June 22, 2024

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The author, Jackie Lam.

Courtesy of Jackie Lam

• I’m hoping to semi-retire in my 50s, but that’s hard to do if my own finances can’t be my top priority.
• I spoke with CFP Thao Truong about balancing my own needs with my family’s needs.
• We discussed defining my goals and communicating what financial help I’m able to offer.

As a single woman living in Los Angeles, it can be hard enough to cover living expenses, let alone save for my financial goals. As I hope to ideally semi-retire in my 50s, I’ve been focused on saving for retirement and bolstering my savings as much as possible.

However, I was raised in a household where it was deeply ingrained that we were to be generous and help others at all costs. Being selfish was a cardinal sin. My mom would tell stories about how my grandfather would cook a large pot of soup for churchgoers at his Catholic parish in Vietnam and leave nothing for himself to eat.

While I do want to help my family, this messaging isn’t conducive to tucking funds away for Future Me and putting my own financial needs and goals top of mind. To figure out the best way to strike a balance — focusing on my financial needs with helping my family — I spoke with Thao Truong, a certified financial planner at Morton Wealth, on how to best do this.

Communicate your perspective

One thing you can try is communicating with your loved ones about how you’re doing what’s best for your entire family in the long term, explains Truong. By taking care of your financial needs, you’ll be in a much better place to care for your loved ones.

Truong moved from Vietnam to the States as a teenager. Her parents were going through bankruptcy back in Vietnam, and Truong took on jobs while in school to support them. She felt she had to learn financial independence so she could take care of her parents back home.

Budget for your loved ones and set expectations

You can also strike a balance by budgeting a certain amount to send home on a monthly basis. Depending on your situation, you not only need to know your wants and needs, but you also might need to know your family’s wants and needs.

In the case of Truong, she eventually got to a point where she drew the line by sending her family in Vietnam a specific amount each month and letting them know it’s on them to figure out how they want to spend it. “Ideally, both sides need to have an understanding of where you’re coming from and have the right expectations,” says Truong.

Consider talking to your loved ones about what they really need and what’s essential to their survival. Truong realized that if she kept sending her family money like this, they wouldn’t learn to control their own budget.

“Just waiting for a paycheck from me, I’m enabling them. I’m not teaching them the right habits,” Truong says. “Last, I’m preventing my own ability to save for my emergency fund, to build my investment account. In the long run, I’m not doing everyone a favor.”

Get a handle on your financial situation and set clear goals

Financial wellness means having a healthy, well-balanced relationship with money, says Truong. “To achieve this, you need to understand your financial situation thoroughly,” says Truong.

Truong suggests doing the following:

• To start, take a good look at your income and expenses. Figure out if you’re living within your means. “Living within your means is crucial for building wealth,” she says. “Even high earners can struggle if they don’t manage their spending.”
• Set clear financial goals. What do you hope to achieve in the next three, five, 10, and 20 years? For example, you might plan to pay off your student loans in three years. “Establish a timeline for these goals, and develop a spending strategy that allocates your monthly income to needs, wants, and future savings,” says Truong.
• Find ways to diversify your income. Once you have a spending strategy in place, Truong recommends exploring ways to increase wealth and diversify your income sources — for instance, through your job, benefits, side gigs, and investments.

Don’t let emotions drive your decisions — and help your family learn to do the same

Emotions are normal, but don’t let them drive your money decisions, recommends Truong. “You can respond to the emotions, but you don’t have to react,” she says. “Step back and ask yourself why you feel this way. Do you think these feelings are reflecting your current situation correctly?”

You’ll also want to steer your family toward financial education and resources — and always aim to continuously expand your financial knowledge. “Small, incremental changes can lead to significant success over time,” says Truong.

Consider working with a professional

Changes can be challenging, but that’s how you’ll grow. Get help from a professional. If you’re wrestling with difficult emotions, for instance, guilt that you’re failing your family, or a fear of losing them by setting boundaries, it could be helpful to work with a financial therapist.

If you want help with your financial situation and juggling your needs and your family’s needs, consider working with a financial advisor. Truong suggests looking into the Foundation for Financial Planning, which has a directory of nonprofits that work with certified financial planners who offer pro bono support.

Speaker of the House Nancy Pelosi (D-CA) holds her weekly press conference at the U.S. Capitol on August 25, 2021.

Kevin Dietsch/Getty Images

• The DEMZ and MAGA ETFs offer investors a way to express their political beliefs via their investments.
• DEMZ includes firms that mostly donate to Democratic campaigns, while MAGA buys Republican-aligned companies.
• DEMZ has outperformed MAGA and the S&P 500 since its November 2020 launch.

Politically-minded market participants can express their views via their investments by buying shares of Democrat and Republican-aligned exchange-traded funds — and on the basis of returns, one has the edge in this corner of America’s political debate.

The Point Bridge America First ETF and the Democratic Large Cap Core ETF both base their investment holdings on the political contributions of corporations.

“The Democratic Large Cap Core Fund is the first investment product that strives to replicate the S&P 500, without the GOP,” the website of the fund says.

The constituents in the fund, which trades under the ticker symbol “DEMZ,” have to have made over 75% of their political contributions to Democratic causes and candidates.

On the flip side, the Republican ETF, which trades under the ticker symbol “MAGA,” includes about 150 companies from the S&P 500 index “that are highly supportive of Republicans” via their political contributions, the fund’s website says.

So far, the Democrat-focused ETF has beaten the Republican-focused ETF on a one-year, three-year, and since-inception basis.

Launched in November 2020, the DEMZ fund is up 78.3% since its inception, compared to a gain of 76.6% for the MAGA fund over the same time period.

YCharts/Business Insider

Perhaps most impressive is that since November 2020, both the DEMZ and MAGA funds have outperformed the S&P 500, which is up about 72% over the same time period.

Over the past year, the DEMZ fund’s outperformance has been more pronounced, with the fund up 30% compared to a gain of 18% for the MAGA fund. Over the past three years, DEMZ is up 39% compared to a gain of 31% for the MAGA fund.

Driving the outperformance in the DEMZ fund is its concentration in mega-cap technology stocks.

The top five stocks owned by the DEMZ fund are Nvidia, Apple, Microsoft, Loews, and Costco.

About 36% of the DEMZ fund is invested in technology stocks, compared to just 3% for the MAGA fund.

Instead, the MAGA fund is heavily invested in industrial, financial, and energy stocks.

The top five stocks owned by the MAGA fund are Vistra, Howmet Aerospace, Charter Communications, Amgen, and Garmin.

Another area where the DEMZ ETF is beating the MAGA ETF is in assets under management, with about $36 million invested in the former and about $21 million invested in the latter.

A resilient consumer has helped stave off a recession so far, but that may not last.

VIEW press / Getty Images

• Slowing consumer spending could be a warning for the US economy. 
• Retail spending dipped 1.3% over the last three months, per Census data.

America’s stimulus-fueled shopping spree looks just about over — and lower spending could be a signal that a consumer-led downturn is on the horizon, economic experts say.

Consumers are finally starting to rein in their spending habits, which could weigh on the economy after a long period of robust spending has propped up economic growth over the past few years. Retail spending ticked 0.1% higher in May, but sales volume has dropped 1.3% year-over-year over the last three months, US Census data shows.

That adds to a 4% decline in retail sales in the first quarter — and it’s a strong sign the long-awaited consumer recession is on the horizon, economist David Rosenberg said recently.

“The weakness in the consumer can now be considered a ‘trend’ … “The ‘build in’ for Q2 real retail sales is now negative, coming on the heels of a -4.4% annualized decline in Q1,” he said in a note to clients this week. “Early signs of a consumer recession finally coming to the fore.”

Shoppers aren’t opening their wallets as easily as they deal with the cumulative effects of inflation and a cooler job market.

A higher cost of living and sluggish hiring activity were cited as key reasons consumer sentiment has soured, according to a recent McKinsey survey. Among those surveyed by the consulting firm, 55% said they felt “pessimistic” or had “mixed” feelings about the economy in the second quarter.

“In general, consumer attitudes remain depressed relative to pre-pandemic — likely a function of lingering angst over inflation and interest rates,” Deutsche Bank strategists said in a recent note. “Though the labor market appears strong on the surface, consumers’ confidence around the labor outlook has begun to slip and suggests a potential pick up in the unemployment rate.”

Consumer finances, especially among lower- to middle-income households, are also looking worse than they did last year. The delinquency rate on credit card loans ha risen to its highest level in 13 years, according to Federal Reserve data.

76% of consumers, meanwhile, said they made a “trade-down” in the first quarter, such as by searching for cheaper prices or switching to a cheaper brand, the McKinsey survey found.

“The consumer is spent up and lent up,” Stephanie Pomboy, a veteran forecaster who was among the commentators who called the 2008 financial crisis, said in a recent interview with the “Thoughtful Money” podcast. “They’re spending every dollar they have, and then some, just to keep up with the basic necessities.”

According to the McKinsey survey, 37% of consumers said they intended to reduce their spending on takeout meals, and 35% said they intended to spend less at sit-down restaurants. More than 30% of respondents said they planned on spending less money on international and domestic flights, while 32% said they would spend less on alcohol.

Those spending cuts could deal a blow to GDP, which has already softened after a remarkably strong few quarters in 2023. The economy grew 1.6% in the first quarter of this year, compared to 4.9% and 3.4% in the third and fourth quarters of last year.

The US has 52% chance of slipping into recession by May of next year, according to projections from the New York Fed.

“A further slowing likely looms in Q3,” Ian Shepherdson, the chief economist of Pantheon Macroeconomics said of total consumption in a note this week. “The slowdown is genuine, and still developing.”