Travel to Financial Success

This is today's headline news on  bartchart.com : "March 10-year T-notes (ZNH24) this morning are up by +8 ticks, and the 10-year T-note yield is down -3.7 bp at 4.227%.  T-notes  shook off early losses today and  are slightly higher on some Fed-friendly economic news ." Fed-friendly economic news While the Federal Reserve considers many factors when making monetary policy decisions, there are four key factors that seem to have influenced the market's perception of "Fed-friendly" economic news this morning: Inflation: The January core PCE deflator, a key inflation measure, rose at the slowest pace in 2-3/4 years . This suggests easing price pressures , which aligns with the Fed's goal of price stability. Labor Market: Weekly jobless claims rose more than expected , indicating a potential softening of the labor market . This could be seen as a positive by the Fed, as they are looking to balance inflation control with maintaining full employment.  Purcha...

𓆝 𓆟 𓆞 𓆝 𓆟 𓆞  Updated  content from Oct 9, 2024 𓆝 𓆟 𓆞 𓆝 𓆟 𓆞 𓆝 The neutral rate is the interest rate that doesn't stimulate or slow down the economy.  Investors should watch the neutral rate and the pace at which rates approach it: The Fed predicts a neutral rate of 3.4% in 2025, higher than their previous estimate of 2.5%. The market generally expects a neutral rate between 2.5% and 3.5% at this moment. The Arora Report disagrees and believes the neutral rate will be higher, likely in the range of 3.25% to 4.25% . They base this on the assumption that economic and geopolitical factors remain relatively stable . 𓆝 𓆟 𓆞 𓆝 𓆟 𓆞 Updated  content from August 23, 2024 𓆝 𓆟 𓆞 𓆝 𓆟 𓆞 𓆝 On August 23, 2024 , the Chair of the Federal Reserve said: “ The time has come for policy to adjust . The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”  Chief Market...

Key points: You can withdraw more than the RMD amount. RMD withdrawals are taxed as income. Qualified Roth IRA distributions are not counted as Required Minimum Distributions (RMDs). Roth conversions   don't fulfill the RMD requirement . [4]   You must take your RMD for the year before converting to a Roth IRA.   The RMD amount is considered a taxable distribution and is not eligible for conversion. Failing to take RMDs results in a 50%  penalty  ( reduced to 25% by SECURE 2.0 , potentially 10% if corrected within two years). Roth IRAs do not require RMDs while the owner is alive. A 76-year-old with a $100,000 IRA balance would have an RMD of approximately $4,219.41 in 2024, which is about 4.22% of their account balance. Different rules apply to beneficiaries inheriting retirement accounts. What are RMDs? Required Minimum Distributions (RMDs) are the minimum amoun...

Roth IRA: Key Takeaways Tax-Free Withdrawals : Roth IRAs allow  tax-free and penalty-free withdrawals  for qualified distributions. Unlike traditional IRAs, where withdrawals are taxed, Roth IRAs offer tax advantages. Contribution Limits : The  combined annual contribution limit  for traditional and Roth IRAs is  $6,500  (or $7,500 if you’re 50 or older). This limit applies to both types of IRAs combined. If you earn $161,000 or more as a single taxpayer, or $240,000 or more as a married-filing-jointly taxpayer, then you can't contribute anything directly to a Roth IRA in the 2024 tax year. Income Limitations : Roth IRA contributions are  phased out for higher-income earners . Verify your eligibility based on your modified adjusted gross income (MAGI). No Required Minimum Distributions (RMDs) : Unlike traditional IRAs, Roth IRAs have  no mandatory withdrawals  after a certain age. You can leave funds in your Roth IRA indefinitely if you ch...

Standard vs. Itemized deductions – Pros and Cons Key Points to Remember You cannot claim both the standard deduction and itemized deductions on the same tax return. The  standard deduction  is always a fixed dollar amount, regardless of your actual expenses. Choosing the  standard deduction  is generally simpler than itemizing, especially if your itemized deductions wouldn't exceed the standard amount. Itemizing can be beneficial if your total itemized deductions (such as mortgage interest, state and local taxes, medical expenses, and charitable donations) exceed the  standard deduction  for your filing status. For more detailed information and specific calculations based on your situation,  consult the IRS website or a tax professional . Should you itemize or take the standard deduction? When deciding between the  standard deduction  and itemized deductions for your 2023 tax returns, it’s essential to consider the trade-offs. Here are ...