Daily Bullets…..for July 30, 2014

·         GDP now a “concern”…..Commerce Dept this morning reported 2Q real GDP grew 4.0% which was stronger than expected. Consumer spending grew 2.5%, also ahead of expectations. Excluding inventory changes, GDP grew 2.3% vs. -0.9% in Q1. Core prices grew 2.0% vs. 1.2% in Q1. Domestic demand rose 2.8%, the strongest pace since 3Q-11 and up from 0.7% in Q1.

What’s the point? A stronger-than-expected GDP report today is causing consternation among investors that it may induce the Fed to raise interest rates sooner than expected. The “big guessing game” continues. The yield on the 10-yr. Treasury jumped 3% to 2.55%. No question, the report does reflect an improving economy. However, when excluding inventory changes that can be volatile from quarter to quarter, core growth was about 2.3%....OK, but certainly not booming. Employment growth in July, also reported this morning, was considerably below that of June. So is the economy on a new “boom path” for growth? We doubt it. Does it mean the Fed will dramatically accelerate its plans for raising interest rates? We doubt it. We think it portrays more of what we expected: continued gradual improvement in economic growth with moderate inflation. We doubt this will change the Fed’s longer-term view on its interest rate strategy, which we believe is more dependent on wage inflation and employment data. Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140730&id=17816646

·         Importance of a financial plan….Good article in link below discusses mistakes many people make in long-term term retirement planning. A key point in the article is the importance of working with a financial planning and/or tax advisor to optimally position assets for retirement as well as post-mortem transfer.

What’s the point? The article, while short, provides a good summary of key mistakes people make in managing retirement assets: not having a disciplined savings plan, not properly managing/consolidating multiple retirement accounts, “raiding” retirement accounts to fund current expenses, and lack of estate planning. For many, if not most people, getting proper retirement and estate planning advice is critical. Good advice can significantly improve the likelihood of achieving one’s financial and life goals. Many people try to “go it alone” because they do not know that the benefits of financial planning can far outweigh the costs. Financial planning is a more complex process than people realize. Working with a competent advisor can pay for itself many times over in higher asset growth, fewer retirement planning mistakes, higher retirement income, and a larger estate, not to mention greater peace of mind and a more enjoyable retirement. Link: http://finance.yahoo.com/news/retirement-regrets--costly-mistakes-to-avoid-152725945.html