THE WEEK ON WALL STREET
Stocks advanced last week, powering ahead with pre-holiday optimism despite geopolitical tensions and two disappointing Q3 corporate updates.
The S&P 500 Index rose 1.68 percent, while the Nasdaq Composite Index gained 1.73 percent. The Dow Jones Industrial Average led, picking up 1.96 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, was flat (-0.05 percent).
FACT OF THE WEEK
The 1621 Thanksgiving celebration marked the Pilgrims’ first autumn harvest, so it is likely that the colonists feasted on the bounty they had reaped with the help of their Native American neighbors. Local vegetables that likely appeared on the table include onions, beans, lettuce, spinach, cabbage, carrots and perhaps peas. Corn, which records show was plentiful at the first harvest, might also have been served, but not in the way most people enjoy it now. In those days, the corn would have been removed from the cob and turned into cornmeal, which was then boiled and pounded into a thick corn mush or porridge that was occasionally sweetened with molasses.
Both the Pilgrims and members of the Wampanoag tribe ate pumpkins and other squashes indigenous to New England—possibly even during the harvest festival—but the fledgling colony lacked the butter and wheat flour necessary for making pie crust. Moreover, settlers hadn’t yet constructed an oven for baking. According to some accounts, early English settlers in North America improvised by hollowing out pumpkins, filling the shells with milk, honey, and spices to make a custard, then roasting the gourds whole in hot ashes.
MARKET MINUTE
Stock Push Ahead
Stocks showed mixed results during the first half of the week due to geopolitical tensions that boosted precious metals and put pressure on Treasury yields. The Dow Industrials jumped out in front midweek and never looked back. Disappointing earnings on Tuesday from a large box retailer held back some gains in the broader S&P 500. A mixed Q3 update report from the nation’s leading AI chipmaking company also tempered gains a bit. Year-end optimism, especially around consumers driving a healthy holiday shopping season, supported the rally for much of the week. Fresh data that weekly jobless claims dropped to a seven-month low also lifted spirits.
Small-Cap Focus
For several weeks, investors have favored small-cap names over larger-cap issues. This trend was again on display last week. The Russell 2000, an index of 2,000 small-cap companies widely used as a benchmark for U.S. small-cap stocks, rose 4.50 percent for the five days of trading. In the month-to-date through November 22, the Russell is up nearly 9 percent.
FINANCIAL STRATEGY OF THE WEEK
Financially Savvy at Six Figures
Reaching six figures is no easy feat. If you’re one of the hard-working few who have made it to this milestone, give yourself a pat on the back and celebrate. It can be tempting to feel like now that you've made it to the top of this mountain your financial worries are over. But before you go reaching for a bottle of champagne or calling a Ferrari dealer, consider this: the majority of Americans living paycheck to paycheck are from higher income households. In fact, out of 9 million Americans surveyed, 8 million of those are in higher income brackets.
Now it's more important than ever to take an active role in managing your money. Don't equate earning six-figures with the ability to spend six-figures. Fortunately, there are several strategies that may help:
Steps to Take
There is no one-size-fits-all strategy for maximizing your new six-figure income. Every person is different, and some suggestions may mean more to you than others. But there are tried-and-true methods that can help point you in the right direction when it comes to your financial health.
Review Your Budget
Now that you are making six figures, you may be tempted to never look at your budget again. Resist this temptation and go back over your budget to make sure your spending is based on your overall approach. Feel free to adjust your line items to match any new priorities without going overboard. Careful preparation may help you know how much you can consider spending on that splurge item that you found online. Your renewed budget should be designed to follow your other new goals, knowing that your day-to-day matters are on firm footing.
Target Unproductive Debt
Not all debt is bad, as much of it helps you both financially and in terms of your quality of life. But certain types of debt, like credit cards and personal loans, may be something you want to manage better. Set a goal for your unproductive debt, which may put you in a better overall financial position. Each penny you save can go toward other goals, such as vacations, travel or even retirement.
Build Your Emergency Fund
Life is full of the unexpected. Prepare by setting aside enough liquid money to cover three to six months of expenses. This reserve may help you manage through a job loss or an injury or illness that requires time to heal.
Don't Forget About Taxes
Now that you’ve entered a new income bracket, your tax obligations may have changed. Take time to review your tax situation in an effort to avoid year-end surprises. This article is for informational purposes only and is not a replacement for real-life advice, so be sure to consult a tax, accounting, or human resource professional before modifying your tax-withholding strategy.
Don’t Forget Your Retirement Plans
If you haven’t started planning for retirement, your new income level may allow you to start setting aside money using a company-sponsored retirement plan. Initially, a financial professional may be able to provide guidance concerning the role a retirement plan can play in your overall financial strategy.
Move Forward Confidently
Restructuring your budget, managing debt, creating an emergency fund, and beginning to consider retirement may help ensure a more comfortable financial future. Even at a six-figure income, proactive preparations can help position you such that your money will eventually work for you.