The power of “compound interest” is a concept that has been around for a long time and its benefits can be applied to a number of strategies designed to help accumulate wealth over time The secret is to start early and let time work its magic In this article we share some ideas that leverage the power of uninterrupted compounding to help our clients accumulate wealth at an early age Readiness…, Example of compound interest, Let’s review the basics of compound interest by looking at two 25-year-old investors who make different decisions about contributing to their 401(k Investor A contributes $19000 to his 401k for the next 15 years and then stops contributing Investor B decides she can’t afford to contribute to her 401k right now and waits until she is 35 before contributing She then contributes $19000 for 30 years…, Ideas to leverage uninterrupted compounding, Listed below are three ideas designed to leverage the power of uninterrupted compounding to help build wealth at an early age 1 | Fund a Roth IRA for your children and/or grandchildren Many of our clients – regardless of their income level – use Roth IRAs or Roth 401(ks as part of their wealth accumulation plan In these accounts after-tax money is contributed growth is tax-free there is no…, Age, Year, Childs Income, Contribute, Return, Dollar Amount, 12 2 $500 $500 500% $1051 14 4 $1500 $1500 500% $3709 16 6 $3000 $3000 500% $9189 18 8 $5000 $5000 500% $19331 20 10 $15000 $6000 500% $33088 22 12 $70000 $6000 500% $48779 24 14 $80000 $6000 500% $66079 26 16 $90000 $6000 500% $85152 28 18 $100000 $6000 500% $106180 30 20 $110000 $6000 500% $129363, Assumptions, 5% straight-line annual returns $7000 maximum contribution to Roth IRA if you’re under age 50 $8000 if 50 or older (Tax Year 2024 IRS Law Child begins full-time work at age 22 earning a salary grown by $6000 annually Assumes Modified AGI falls within income limitation for Roth Contribution   2 | Be strategic about college funding With the average cost of a private university being upwards of $…, In summary, The power of uninterrupted compounding is not a new concept but it is a proven one Applying this concept as part of a strategic wealth management plan allows our clients to help achieve the goals they wish to accomplish We gave just three examples above We recommend you speak with your Mesirow wealth advisor about how you can leverage these ideas as port of your financial plan, Published March 2025, Sources https//wwwirsgov/retirement-plans/roth-iras https//wwwsavingforcollegecom/article/how-much-can-you-contribute-to-a-529-plan https//wwwsavingforcollegecom/calculators/college-savings-calculator https//mydimensionalcom/insight/special_postings/234992/

For most people  currency exchange rates are numbers in small print buried in the business section of a newspaper or an app they check before an international trip But given the potential effects those tiny numbers can have on the lives of people or the fortunes of nations it would be fitting to list them on the front page next to the day’s forecast Currency exchange rates can be like the weather…, Currency exchange for traveling and Big Macs, It’s different for international travelers who need to exchange USD for the local currency The occasional traveler buying small amounts of currency might not realize that the price of the local currency is different today than it was last month or last year Frequent travelers on the other hand are likely much more aware of how currency exchange rates can change  In late September 2024 a British…, Currency exchange and foreign assets, Not only can currency exchange rates be misaligned but their fluctuation can result in gains and losses for holders of foreign assets Owners of international equities buy their shares in local currency and hope to profit from rises in the local currency price of the stock But changes in the exchange rate can also boost – or reduce – the profit  The table below presents the situation where the…, Local (Euro equity price, Euro – dollar rate exchange, Equity dollar value, Start of year €2000 $110/€ $2200 End of year €2000 $121/€ $2420 Change 00% 10% $220 (10%   If the asset value is large enough currency rate changes can have stunning effects If you bought a French vacation home for €1500000 an equivalent $1650000 the exchange rate suddenly becomes an important benchmark For not only is the value of your house based on location location location but a penny change…, Currency exchange in history, While dramatic and damaging to individuals and firms manipulating a country’s exchange rate for achieving domestic economic aims is not unusual In the Great Depression international trade and finance collapsed after the stock market crash in the autumn of 1929 and countries took unilateral steps to help domestic manufacturers Nations devalued their currencies to make their exports cheaper and…, The Asian currency crisis, Like the Great Depression the Asian currency crisis of 1997 involved unsupportable fixed exchange rates But instead of being fixed or pegged to gold these Asian nations’ currencies were pegged to the US dollar The central banks of these nations managed the value of their currencies so that they fluctuated up and down with the US currency The crisis began in July 1997 when speculators sold large…, How currency exchange might affect the US, Currency crises can seem long ago or far away but it’s not unimaginable that the United States could suffer one Burgeoning costs for social services like Medicare and Social Security and crushing interest payments from historic levels of debt could be the catalyst for a  dollar crisis In fiscal year 2025 to 31 January the social programs have consumed  34 percent of government spending net…, Electrical circuits and currency exchange, Potential pitfalls for the US dollar show how currency exchange rates are like electrical circuits running in the background rarely thought about essential for modern life Its not until there’s a disruption that we notice them and worry  Significant changes in currency exchange rates could reflect concern about economic and political conditions or disasters like armed conflict Keeping an eye on…, Explore more currency insights, Understanding currency quotes, Learning how exchange rates are presented and what they signify can offer a clearer view of the economic trends and market forces shaping currency values Read article, Four strategies to reduce liquidity management stress, Different approaches can help investors manage the liquidity challenges associated with their currency program Read article, Safe haven currency hedging, Why do US and Swiss pension funds use different currency risk strategies Read article

Leo Harmon discusses the economy since the start of Mesirow Monday two years ago investing rate cuts and what we can expect in the next couple of months Listen to broadcast  , Explore, Each week our speakers share insights on topics including the basics of personal finance investing and wealth management financial security financial literacy and retirement planning | Mesirow Mondays

An intrafamily loan is a wealth planning strategy that has become increasingly more utilized in the current interest rate environment These loans can be used for a variety of reasons including helping a child purchase a home investing in a business or just providing additional liquidity, The rate of these loans is lower than a traditional loan The interest rate used is based on the Applicable Federal Rate (AFR published monthly by the IRS  These rates change monthly To view the current rate click  here When implementing a loan of this nature the AFR is the minimum rate that can be charged without incurring adverse income or gift transactions To illustrate how this may work let’s…, Published January 2025, Mesirow does not offer intra family loans  1 https//wwwmesirowcom/sites/default/files/PDFs/Wealth/2022-Contribution-Limits-webpdf Source  appsirsgov/app/piclist/list/federalRateshtml 

Potential to increase return while reducing risk by simply hedging currencies, For US investors the management of currency risk in their portfolios has historically been an afterthought for a variety of reasons and assumptions chief among them zero expected return portfolio diversification and low materiality in the portfolio We will touch upon each of these views discussing their validity evolution and relevancy within the current market environment Zero expected return, Assumption – Currencies have zero expected return so currency management is unnecessary as it will wash out in the end, Historically developed market currencies have not added or detracted meaningful return in multi-decade time horizons Since the introduction of the Euro in 1999 EAFE currencies have gone full cycle crossing the 0% return line again in early 2022 (Figure 1 However the impact over shorter time horizons is relevant as both plans and managers are often judged over periods as short as one to five years…

October 14 2024 |, By, Mesirow Currency Management, The debt level is approaching its 1946 historic high Will it take a collapse in the bond or FX market before we take action, Current US debt level, “How did your economy collapse” the world asked “Two ways” the US said “Gradually and then suddenly” , This version of memorable lines from Ernest Hemingway’s The Sun Also Rises could describe what happens if the US fails to halt its swelling federal debt Some think that a crisis is unlikely and that worries about the national debt are excessive and unnecessary But everyone has the same question what level of debt is too much   No one will argue that the current debt is historically high The…, 2023 actual, 2024, 2025, 2026, 2027-28 Annual average, 2029-34 Annual average, Real GDP 31 20 20 18 17 18 Consumer Price Index 32 30 23 22 22 2 Unemployment rate 36 39 40 42 44 45 Interest rates (10-yr Treasuries 40 45 41 37 36 40 Source https//wwwcbogov/publication/60039 Real GDP and CPI figures are the change from fourth quarter to fourth quarter Unemployment and interest rates are annual averages  The US debt and the 2024 election, We’re not worried, Count the presidential candidates among those that aren’t overly concerned about budget deficits and resulting debt Neither candidate has prioritized deficit-cutting measures in their campaign proposals or promises Instead Donald Trump and Kamala Harris look to expand the debt burden between $12 trillion to $58 trillion over the next decade  Of course what a candidate says while campaigning and…, Sure we can finance that for you, The US doesn’t lack for willing lenders including foreign and international nations and investors who have the largest share of publicly held debt TABLE 2 PUBLICLY HELD US TREASURIES OWNERSHIP DECEMBER 2023, Holder, Debt amount ($ billions, Publicly held debt (%, Federal Reserve (repurchase agreements $5239 191% Depository institutions $1653 60% US savings bonds $171 06% Pension fund – private $614 22% Pension fund – state and local governments $421 15% Insurance companies $477 17% Mutual funds $3659 134% State and local governments $1680 61% Foreign and international  $7941 290% Other $5537 202%, Total publicly held debt, $27329, 1000%, Sources https//fiscaltreasurygov/reports-statements/treasury-bulletin/currenthtml pgpforg/blog/2024/08/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt Asian nations most of them focused on exporting competitively priced goods to the rest of the world the US in particular have about a 377% share of foreign-held US debt In a pattern called Bretton Woods II (the original…, It won’t go on forever although we wish it would, Eventually however China and other foreign holders of US treasuries will nervously view their portfolios of government bonds and bills issued by a nation that seems unwilling to address its budget deficit and ever-expanding accumulation of debt It is unreasonable to expect that foreigners will continue to finance the US deficit at interest rates that don’t adequately compensate them should the…, Question So how much debt is too much debt Answer 175% to 200% of GDP, That’s according to the Penn Wharton Budget Model a non-partisan research group that provides public policy fiscal analyses A debt level of 200% of GDP is far in the future past the CBO’s 30-year publicly held debt projection of   166% of GDP in 2054 But 200% of GDP is a best-case scenario a more likely debt limit is 175% of GDP which is close to the estimated 2054 public debt level  It’s…, Yes, The US could default on its debt explicitly unwilling to pay interest or principal Or default might be implicit the US government would coordinate with the Federal Reserve to buy treasuries on the open market creating capacity for the Treasury to issue more debt The Federal Reserve actions would increase the money supply and likely result in higher inflation so that the US government would pay…, Explore more currency insights, Rapid payments speed money through the financial system economic growth follows, Will developed countries follow the instant payment lead of developing countries  Read article, US debt is headed to unimaginable levels, Since 1990 debt crises have erupted periodically but the next one may not be so easy to dismiss Is a financial reckoning coming Read article

Many people are well aware of two key advantages of a Roth IRA the ability to withdraw money tax-free — which appeals to anyone who wants to minimize their tax bite in retirement — and the ability for wealthier taxpayers to maximize assets and minimize taxes for their heirs Unfortunately high earners often assume they are ineligible for a Roth IRA This is not necessarily true Even though you…, One such strategy is accomplished by first making non-deductible contributions to a traditional IRA (up to $7000/year in 2025 or higher if you qualify for catch-up provisions Non-deductible contributions create “after-tax” basis in the pre-tax IRA Later one might consider converting this to a Roth IRA and this conversion is likely to be partially tax free due to the after-tax basis in the account…, Tax time is a great time to have the conversation with your Wealth Advisor, For many of our clients tax time is the perfect time to discuss whether converting their traditional IRA to a Roth makes sense based on their unique circumstances We can discuss eligibility requirements the pros and cons of a conversion and the potential benefits of a Roth IRA for intergenerational wealth transfer, Commonly asked questions about Roth IRAs, What is the difference between a Roth IRA and a traditional IRA, Roth IRAs are similar to traditional IRAs except that Roth contributions are “after-tax” which means you pay taxes on your contribution upfront Consequently withdrawals from Roth IRAs are tax-free meaning that your investment earnings and growth are never taxed Traditional IRA contributions are not taxed upfront but are instead taxed when you take a distribution from the account Depending on your…, Who can contribute to a Traditional IRA, Everyone can contribute to a traditional IRA as long as they have earned income or qualify for a spousal IRA However only taxpayers who meet certain requirements may take a deduction for their contribution Individuals that don’t meet the requirement are still eligible to make non-deductible contributions to a traditional IRA, Who can contribute to a Roth IRA, Only taxpayers with income below certain levels may contribute to a Roth IRA In 2025 individuals with income less than $150000 and married couples filing jointly with income of $236000 or less are eligible¹, How much can you contribute to a Roth IRA, The contribution limits are the same as a traditional IRA You can contribute $7000 per year plus $1000 if you are over the age of 50 (“Catch-Up Deferrals”, What is the deadline to contribute to a Roth IRA, You have until April 15 2025 to make a contribution for the 2024 tax year², What are the advantages of a Roth IRA, There are many advantages When money is distributed from a Roth it is entirely tax-free including the earnings There are no annual required distributions from a Roth (there are for a traditional IRA A Roth IRA is a tax-efficient way to transfer wealth to beneficiaries upon the account owner’s death A spouse inheriting their partner’s Roth is not required to take mandatory distributions while non-…, Can you have both a Roth and traditional IRA, Yes you can have both It is important to keep in mind though that the contribution limit of $7000 is applied aggregately not $7000 for each account, What are the rules for Roth IRA distributions, There are two primary requirements for distributions to avoid taxes and penalties Roth owners must be at least 59½ The distribution must occur five years after the establishment of a Roth account, What is a Roth 401(k, Roth 401(ks are relatively new and often provide additional retirement savings flexibility They function similarly to a traditional 401(k except the employee contributions are taxed up-front just like a Roth IRA However anyone can contribute to a Roth 401(k if available as there are no income limitations It is important to note that if you contribute to a Roth 401(k any contribution your employer…, Published February 2025, 1 https//wwwmesirowcom/sites/default/files/PDFs/Wealth/Contribution-Limit-Guide-2025pdf Additional source  https//wwwinvestopediacom/terms/r/rothiraasp