This Week’s Good Financial News
Even as the Federal Reserve continues to hike short-term interest rates to stall inflation, the US labor market is hanging on.
For example, wages are up 5% over the past year as workers demand higher pay. Initial claims for unemployment are at historically low levels, and the unemployment rate is at 3.7%
This is good news!
Now, maybe this starts changing as higher rates slow the economy down. More, I’m aware that higher wages contribute to inflation, even as workers demand raises to keep up with inflation.
Yet, I can’t help but think that the strong job market is unambiguously good for the US economy.
Our greatest hope should be that we can tame inflation without hurting the labor market. Strong job and wage gains, especially at the lower ends of the job market, will help us curb income inequality, an incredible positive for all subsets of our society.
An Investment Note for Retirees
Retirees are often curious about whether to invest globally or have a home bias, investing primarily in US companies.
I’m an advocate for investing globally. Why?
Diversifying globally helps smooth the ride of investing.
Like any global market segment, the US can have a bad year or even a bad decade. Remember, the US stock market was flat for most of the early 2000s.
Ultimately, there are timeless reasons to diversify globally and timely reasons to diversify globally.
Timeless Reasons to Invest Globally
Risk Management (i.e., smooth the ride)
An Increasingly Global Market: as international economies grow, opportunities abound outside the US.
Market Cycles: Sometimes, US shares underperform (like 2000-2007). Sometimes, they outperform (like 2010-2021). Instead of trying to guess which regime we are in, why not diversify?
Timely Reasons To Invest Globally
Valuations are currently much lower in international stocks compared to US stocks. In other words, international stocks are cheap compared to US shares.
Higher Dividend Yields: International shares have higher dividend yields at present.
A Strong Dollar: The dollar has been increasing for years, hurting the returns of US investors in international shares. At some point, this could change juicing returns in foreign markets.
A Thought on Retire on Purpose
Meister Eckhart said, “If the only prayer you ever say in your entire life is thank you, it will be enough.” I love this sentiment. It reminds me that a simple whisper of thanks is often enough. Forget all the big words, the lengthy recitations, and the paragraphs you were supposed to memorize. All too often, the platitude obscures the core truth: Be thankful. Just be thankful.
Thankfulness can play a major role in your thinking about your current financial situation and retirement.
Are you thankful for what you have today? Do you operate from a place of abundance or scarcity?
Countless retirees spend their entire retirement with frustration and regret, fixated on the idea that they could have had, or should have, so much more.
Yet a joyful retirement, and who doesn’t desire a joyful retirement, comes from a place of abundance, not a place of scarcity.
Thank God I have what I have. I’m so grateful.