by Keith Gustafson CFA and Christopher M ONeill PhD CFA CFP, ®, FRM, ®, ChFC, ®, Executive summary, Financial assets in general perform very poorly in high inflation environments with negative inflation-adjusted (real returns being the norm  Among fixed income assets Treasury Inflation Protected Securities (TIPS do a decent job of mitigating the negative effects of inflation which may or may not translate into positive real returns In terms of fixed income the optimal inflation-hedging strategy…

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…