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Confidence Wealth & Insurance Solutions March 25, 2016 No Comments

[Financial Friday] What is the federal funds rate?

In December 2015, the Federal Open Market Committee (FOMC) raised the federal funds target rate to a range of 0.25% to 0.50%, the first shift from the rock-bottom 0% to 0.25% level where it had remained since December 2008.

The federal funds rate is the interest rate at which banks lend funds to each other from their deposits at the Federal Reserve, usually overnight, in order to meet reserve requirements. The Fed also raised a number of other rates related to funds moving between Federal Reserve banks and other banks. The Fed does not directly control consumer savings or credit rates, but the federal funds rate serves as a benchmark for many short-term rates, such as savings accounts, money market accounts, and short-term bonds.

The prime rate, which commercial banks charge their best customers, is typically about 3% above the federal funds rate. Other forms of business and consumer credit–such as small-business loans, adjustable-rate mortgages, auto loans, and credit cards–are often directly linked to the prime rate. Actual rates can vary widely. Fixed-rate home mortgages and other long-term loans are generally not linked directly to the prime rate, but may be indirectly affected by it

The FOMC expects economic conditions to “warrant only gradual increases” in the federal funds rate. Most Committee members projected a target range between 0.75% and 1.75% by the end of 2016, so you can probably expect a series of small increases this year. Although rising interest rates make it more expensive for consumers to borrow, higher rates could be good for retirees and savers who seek current income from bank accounts, CDs, bonds, and other fixed-interest investments.

The FDIC insures CDs and bank savings accounts, which generally provide a fixed rate of return, up to $250,000 per depositor, per insured institution. The principal value of bonds may fluctuate with market conditions. Bonds redeemed prior to maturity may be worth more or less than their original cost. Investments seeking to achieve higher yields also involve a higher degree of risk.

Source: Federal Reserve, 2015

Although the prime rate has been closely aligned to the federal funds rate over the past 20 years, rates on conventional 30-year fixed mortgages have followed a more independent trajectory, generally trending downward over the period.

Source: Federal Reserve, 2016

Confidence Wealth & Insurance Solutions March 21, 2016 No Comments

[Motivation Monday] The Kindness Cycle – And 15 Ideas to Get it Started

Kindness and gratitude are subjects that we just love to talk about, mainly because when you incorporate them into your life, not only are you adding much-needed positivity to the world, you are also nurturing yourself.

Being kind and grateful positively impacts those around you and makes you happier. Studies have shown that people who are generally thankful are less prone to anxiety and depression symptoms. But you don’t really need studies to know this.

Just think about the last time you were kind to someone without expecting anything in return or the last time you felt truly blessed.

How would you describe your mood during and after those actions? If you had to associate kindness and gratitude with a feeling, what feeling would it be?

In a word association game, many people linked kindness with words like compassion, love, and charity. That’s pretty good company.

The act of giving is humble. It promotes social interaction and, even better, it makes you feel good. For these reasons, we are going to tell you how to create a kindness cycle in your own life.

Create a kindness cycle.

Kindness creates a ripple effect, and this one is all about positivity and hope! When you perform a sincere act of kindness, no matter how big or small, people around you will be influenced by it and possibly perform other acts of kindness by themselves.

All of this may seem a bit cheesy, but it’s absolutely real. Much like when someone’s laugh is so pure that everyone in the room feels the joy and starts to laugh as well, when you act out of kindness, you inspire others to do the same.

Usually the more kindness you practice, the more productive and appreciative you’ll feel. There’s just something about being of service to others that triggers positive feelings and thoughts. It makes us feel connected to one another and capable of giving love.

Kindness is wealth.

Kindness doesn’t have to cost a penny, but it does make you rich. Realizing just how much abundance you have now will give you the motivation to improve yourself in all aspects, including your economic situation.

If you’re satisfied with what you have, you won’t feel the need to buy and spend more.

If your financial needs are covered, you will be less stressed and thus more receptive of your spiritual needs. If you don’t have to worry about making ends meet in the future, you will have more time to enjoy the present.

Sure, money isn’t everything, but it also isn’t the villain of the story, like some people make it out to be. Like spiritual guide Osho said: “If you are happy and you have money, you will become more happy. If you are unhappy and you have money, you will become more unhappy because what will you do with your money?”

When you treat those around you (yourself included) in a generous way, you’ll see how the cycle starts. We’re not talking about the law of attraction here. We’re talking about a conscious decision to enjoy giving and treating others with dignity.

Kindness can completely turn a day around. We all have bad times and we’ve all been through some rough battles. Being able to face challenges with a gentle spirit makes us stronger and wealthier.

Kindness transforms into wealth: literally and figuratively.

Giving requires boundaries.

We firmly believe that kindness makes a difference. However, the act of giving – like pretty much everything else – requires healthy boundaries.

If you give and give and give without any regard for your own wellbeing, you’ll end up feeling spent and unappreciated. Sometimes we need time to recharge, and sometimes we’re the ones who need to experience someone else’s kind acts to activate the cycle.

Please do this out of joy rather than expectations of getting something back, which is a sure way to create resentment and harvest unpleasant feelings. Be as generous as you can as long as it feels right for you. Always remember that before you help others, you must first help yourself.

How to start the cycle.

So how can you incorporate more kindness today?

Here are just some of the easiest ideas we came up with, but please do feel free to continue this list (and pass it on).

– Volunteer. At an animal shelter, a food bank, or any other charity. You can make a contribution by offering more than money; you can offer time, compassion, and expertise.

– Compliment someone and really mean it.

– Leave a generous tip.

– Offer your best advice on an online forum.

– Leave a great online review of your favorite local restaurant.

– Write a letter to a friend, family member, or partner and get specific about all the things you love about them.

– While you’re at it, write yourself one of those letters too. Self-compassion matters.

– Always say “please” and “thank you” – you’ll be surprised at the happiness this can create.

– Make a special playlist and dedicate it to someone.

– Apologize when you make a mistake.

– Be present when you meet with somebody. Leave your phone in your purse or pocket.

– Bake some healthy treats and give them away at a children’s hospital.

– Visit a nursing home and share stories with seniors.

– Forgive a person who has harmed you and let go.

– Smile.

Start the kindness cycle!

Confidence Wealth & Insurance Solutions March 18, 2016 1 Comment

[Financial Friday] What is compound interest?

When Benjamin Franklin died in 1790, he left the equivalent of $4,400 each to the cities of Boston and Philadelphia in his will, under the condition that the money be loaned and invested. He stipulated that the cities would have access to a portion of the funds after 100 years and receive the remaining funds after 200 years. When the cities received their balances after 200 years, the combined bequest had grown to $6.5 million. How did such a small initial sum grow to such a large amount? Through the power of compound interest. (Source: Benjamin Franklin Institute of Technology, Codicil to Benjamin Franklin’s Will)

There are two basic types of interest: simple and compound. The main difference between the two is that simple interest generates interest only on the initial principal amount, while compound interest generates interest based on both the initial principal amount and all accumulated interest. Here’s an example of how each works.

Say you put $10,000 in an account that earns 2% simple interest per year. In the first year you would generate $200 and end up with a total of $10,200. In year two, you’d earn another $200, bringing your total to $10,400.

If you put that same $10,000 in an account that earns 2% compound interest per year, in the first year you would generate $200 and end up with a total of $10,200. At the end of the second year, however, interest builds on the interest from the previous year, and now you earn money on the amount in your account rather than the initial principal alone. Therefore, the interest earned in that second year is $204, bringing your total to $10,404.

While the interest may not seem like much at first, it can add up over time, especially when you invest an additional amount each month. For example, if you invest that $10,000 in an account that generates 2% compound interest per year, and then invest an additional $400 per month, your initial investment would grow to $214,943.55 after 30 years. In another 10 years, you would have $315,141.32. With compound interest, time is your friend, so the earlier you can start saving, the better.

Note: This hypothetical example of mathematical compounding is for illustrative purposes only and does not represent any specific investment. Actual results may vary.

Confidence Wealth & Insurance Solutions March 18, 2016 No Comments

[Financial Friday] What do I need to know about submitting the FAFSA?

The FAFSA, which stands for Free Application for Federal Student Aid, is the federal government’s financial aid application. Though the thought of completing it may inspire a collective groan from parents each year, this form is the prerequisite for many different types of federal and college financial aid, including loans, grants, scholarships, and work-study. So filling it out should be one of the first things on your list if your son or daughter will need some type of financial aid to attend college.

Even if you don’t think your child will qualify for aid, you should still consider submitting the FAFSA in two instances. The first is when you want your child to have some “skin in the game” by taking on a small loan. In this case, filing the FAFSA will make your child eligible for an unsubsidized Stafford Loan each year–up to $5,500 for freshmen, $6,500 for sophomores, and $7,500 for juniors and seniors. Unsubsidized Stafford Loans aren’t based on financial need and are available to any student attending college at least half-time.

The second situation for which you might file the FAFSA is when you want your child to be considered for college financial aid. Colleges generally require the FAFSA, along with the CSS Profile form, before they’ll determine whether your child is eligible for any college need-based grants and scholarships.

The FAFSA is available online at fafsa.ed.gov. A new sign-in method (as of May 2015) requires creating an FSA ID, which consists of a username and password. The FSA ID replaces the prior PIN sign-in method and is meant to be more secure.

The FAFSA should be filed as soon as possible after January 1 for both new and returning students because some aid programs operate on a first-come, first-served basis. Practically speaking, many families wait to submit the FAFSA until after they have completed their tax returns, but you don’t have to wait. The FAFSA can be submitted with estimated tax numbers and then updated later with final tax numbers by simply adding the final numbers manually or using the government’s online IRS Retrieval Tool. Regarding the filing timeline, look for a change on the horizon. Starting with the 2017/2018 school year, families will be able to file the FAFSA as early as October 2016 using their 2015 tax information.

What happens after I file the FAFSA?

After you submit the federal government’s FAFSA (Free Application for Federal Student Aid), you will receive a Student Aid Report (either electronically or by mail, depending on how you filed the FAFSA). This report summarizes key data from your FAFSA and provides you with the holy grail of numbers–your expected family contribution, or EFC, which is the amount of money the government expects your family to contribute toward college for the current year before being eligible for federal aid.

For example, EFC27000 means that your expected family contribution is $27,000. Keep in mind that this figure is what the government says you can afford to pay, not what you say you can afford. In fact, many families may find it difficult to pay their EFC, let alone any potential remaining costs.

Review your report carefully to make sure it contains your correct income and asset information. Any corrections should be made immediately and sent back for reprocessing. If you have questions, you can contact the Federal Student Aid Information Center at 1-800-433-3243. An asterisk (*) next to your EFC means that your application has been selected for verification, which means you’ll need to provide additional documentation as specified.

Your Student Aid Report is also sent to each college that your child listed on the FAFSA. The financial aid administrator at each school that has accepted your child will then use the report (along with the CSS Profile form, if applicable) to craft an aid package that attempts to meet your child’s financial need. Aid packages typically include various combinations of federal loans, grants, and work-study jobs along with college grants and scholarships. Colleges are not obligated to meet all of your family’s financial need. If they don’t, it’s called getting “gapped.” In this case, you’re on the hook for your EFC plus any gap.

Both new and returning students will be notified of a college’s aid package in the spring. Some colleges may send a letter, some may post the information on a password-protected online site, and some may do both. Make sure to look over the award carefully. If you have questions or your financial circumstances have changed since you filed the FAFSA, contact the college’s financial aid office.

Confidence Wealth & Insurance Solutions March 14, 2016 No Comments

[Motivation Monday] Why You Should Redefine What Success Is

When it comes down to it, everybody wants to be successful. Whether discussing career plans, relationship goals, financial status, or dozens of other things, the word success tends to appear quite often.

But what exactly is success?

The most basic dictionary definition is this: success is the achievement of desired results. Sounds kind of dry, huh?

It takes just a bit of life experience to understand that success is actually a very subjective concept. Sometimes, even when we’ve achieved some of our goals, we don’t actually feel successful. This usually happens when we buy into another person’s definition of success, rather than creating our own.

Here’s the main reason why you should redefine what success is to you: following a standard definition of success can end up making you fail.

Sure, we all have had a couple (or even multiple!) failures, and there’s nothing wrong with that. Failure is part of life. The problem arises when you’re trying to fulfill someone else’s expectations and when you aspire to become successful under their own terms and conditions.

This leads to setting you back on your true personal goals. That’s not the type of failure that ultimately teaches you a lesson and leaves you feeling wiser; that’s the kind of failure that can drain your confidence little by little… and that is something you can definitely avoid.

You’re you. You’re the only you there is, so why should you follow someone’s cookie-cutter idea of success? Redefine what success means to you.

Here are three steps that can help you create your own version of success.

1. Get personal.

Take some time to yourself and contemplate the things that would make you feel successful. Since this is such a broad concept, breaking success down into categories can go a long way in helping you to feel clear about your goals.

– So, ask yourself: What would make me feel like I’ve succeeded professionally?

Be specific and plan it out. Apply for that job. Take that advanced course you’ve been meaning to take forever. Go for it! Most often than not, it’s only you who’s standing in your own way to greater things.

– On to the second question: What would make me feel like I’ve succeeded financially?

Maybe it’s getting out of debt, taking your business to the next level, or finally improving your relationship with money and learning how to budget properly. Getting clarity on what financial success is to you is extremely important, because when you learn how to handle your income and savings, you’ll be able to pursue whatever other activities your heart and soul want in a calm state of mind.

Overnight success just doesn’t happen. Getting financially fit will allow you to have access to the tools and skills you need to achieve anything you want.

– Finally, ask yourself: What would make me feel successful in my own personal life?

What makes your heart sing? From cooking a new dish to learning how to play a musical instrument or hosting a monthly friends-only gathering, do whatever will make you feel great. Don’t worry if your goals sound small and your dreams don’t seem as big as someone else’s; life’s greatest moments are in the little things.

On the contrary, don’t put yourself down if your goals seem impossible. Remember that a lot of things wouldn’t get done if it weren’t for the big thinkers and dreamers out there.

Whatever your goals are, please keep in mind that it’s not their size that will make you feel successful. What will give you that sense of accomplishment is the knowledge of what you truly want and the journey towards achieving it.

2. Challenge your mindset.

Don’t let limiting beliefs hold you back. Challenge your negative thoughts and tune in into a helpful mindset instead.

Psychologist Carol Deck has written about the growth mindset. “Channeling into the growth mindset” means believing in the idea that intelligence, character, creativity and opportunities don’t come in fixed amounts. Each person has the ability to nourish and grow all these wonderful things because such human characteristics are dynamic.

Imagine taking the bumps in the road as little challenges that will give you the opportunity to grow as a person. That can really change your outlook towards life.

Having a growth mindset means that you can learn how to succeed at whatever you want. So forget about the “I’ve never been good at…” or “I’ve always wanted to but I don’t think I can” way of thinking. You can continue to develop and improve your personality, just like pretty much every other trait.

Next time you catch a limiting thought blocking you, challenge yourself and tune in into the growth mindset perspective instead. We humans have the ability to learn and create without limit. Take advantage of that.

3. Invest in yourself.

Without a doubt, the best investment you’ll ever make is in yourself. Once you’re clear about what you want, make an investment. You know things won’t magically happen. Leaving the course of your life to blind luck will – at the very least – significantly decrease your chances of succeeding.

Invest money in yourself, whether you take courses, read books, change your look, get coaching, or whatever else you decide on. If it’s well thought-out and the desire for it comes from deep within you, it will pay off.

Invest time in yourself. Stop procrastinating and go after your hopes and dreams. Handle it the best way you can and it will always pay off.

To invest in yourself means that you believe in your life’s project. Take that leap.

It’s time to put it all together now.

You’ve identified specific things that would make you feel successful in three main areas of your life: professional, financial, and personal. Review your answers and see if some things overlap, checking for any patterns that may appear. Use all the information you can and (yes, you’ve guessed it) redefine success.

Be honest: are you ready to step out and live the life you know you’re meant to?

A good way to start is to redefine what success is to you.

Don’t forget – that very definition you’ve created can change over time, too. People change and so do goals. Don’t be afraid to redefine success any time you need to, just make sure that when you do so, it comes from a loving and adventurous place.

Once you really know that you don’t have to follow one else’s path but your own, you’ll see how things start getting clearer.

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