Debt Management
Rebekah Eason
Holiday Cash for Students

By: Becky Eason, CFP®

The holidays are upon us and although 2020 isn’t a traditional year people are still getting into the holiday spirits. Gifts have become a huge part of the holidays, which we all know can add a lot of additional stress. This year there is the added stress of what is the best way to get gifts to loved ones? Shipping can be expensive and you risk packages getting delayed, lost, or broken so I wouldn’t be surprised to see more monetary gifts be given.


Holiday Cash for Students

Asking for a Friend - Is now a good time to buy bonds?

February 7, 2022


Q. Is now a good time to buy bonds?

A. Short answer, yes, I do believe it is, for two reasons:

  • It is good portfolio diversification

  • We think the inverse relationship between rising rates and bond prices are already priced in.

Now let me take a step back to answer this question with more data (and of course with some fun charts).  When interest rates rise, bond prices fall.  That’s because when interest rates increase you can get a higher paying coupon at par and your existing bonds aren’t as attractive unless you offer them at a lower price.  This is so that the ultimate total yield (coupon + price appreciation) is comparable.  That is why you may be hearing on the news that bond yields are increasing, but on your investment statement, you see that bond prices are falling.

Over the past year the Barclays US Aggregate Bond Index has fallen about 3.03%, but if you measure from March 18 of 2021 to January 28 of 2022, prices have actually been flat.

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Now let’s take a bigger picture view - over the past 25 years.  Over that period, the target Fed rate increased in 1997-mid-2001, 2003, 2005, 2006, and 2017 - 2018.  Notably, in my opinion, it appears to be more the fear of rising interest rates, than the actual rising interest rates. Looking at history (which we can never guarantee, but still tells a story), I would lean on the fact that bond prices have already been impacted.

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Now let's look at the same 25-year historical data for the S&P 500 Index.  Notice that the S&P did not start to show negative returns for the first two years of the 1997 - mid-2001 rate increase, 2003 had no significant reaction, 2005 saw a smaller return, 2006 the index was up, and it wasn’t until the second year of increases that the S&P reflected a negative return for the 2017 - 2018 target rate increases.  As always, I want to state, we can’t guarantee any of this, but we do feel that market characteristics tell a story.

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Want to hear from others that feel 2022 is going to be a growth year economically speaking?  Watch this video from CNBC:  Jamie Dimon sees the best economic growth in decades, more than 4 Fed rate hikes this year (cnbc.com)

Do your friends ask you financial questions? 
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters under this section.

Asking for a Friend - How do I set my New Year's resolution in motion to save for a goal?

January 31, 2022

Q. How do I set my New Year's resolution in motion to save for a goal?

A.  In this article, How To Set Savings Goals: 6 Tips | Bankrate, among other financial experts, Amy suggests:

Do your friends ask you financial questions? 
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters under this section.

Asking for a Friend -  I’m thinking about gifting money to my children, is there a maximum and do they pay tax on that gift?

January 24, 2022

Q. I’m thinking about gifting money to my children, is there a maximum and do they pay tax on that gift?

A. Gifting money to your children is certainly very generous.  Of course, we always want to run scenarios to make sure that your generosity will still allow you to live your dreams.  

  • In short, you can give as much as you want, and they won’t pay tax on the funds.

  • However, if you give over $16,000 ($32,000 per couple) to any individual, you will need to file Form 709.

  • The current lifetime gift tax exclusion for 2022 is $12,060,000. The annual exclusion does not count towards the lifetime exclusion.

  • If you are thinking about gifting at these levels, we encourage you to work jointly with us and with an estate planning attorney. There are still lookback provisions on gifts, so don’t confuse these IRS limits with your State Medicaid rules (each state is different, and all are complex).


Do your friends ask you financial questions? Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters and post them here.

Asking for a Friend - If a company offers 0% financing, should I take that deal?

January 17, 2022

Q. If a company offers 0% financing, should I take that deal?

A. It depends.  Just because something is zero % interest, doesn’t mean it is worth it.   

  • When I see a deal like this, I often ask if I can purchase something cheaper if I pay up front versus financing the item; sometimes the answer is yes, and I walk away feeling like I got a better deal.

  • If the answer is no, then I take the cash I would have spent on that item and I invest it either in my emergency fund or my brokerage account and try to make the payment out of cash flow. That way if I ever need to pay it off quicker, I have the cash to do it.

  • Make sure you look at the fine print on this, if you accidentally miss a payment or go one day beyond the payment period, they may assess the interest all the way back to the original loan amount, not just what’s left.

Do your friends ask you financial questions? Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters and post them here.

Asking for a Friend - Where can I stash some cash and earn some interest?

January 3, 2022

Q. Where can I stash some cash and earn some interest?

A: If you have some spare cash on hand and won't need it for a few years, currently we are recommending I Savings Bond.

  • What are I Savings Bonds? According to the treasury direct website: "Series I savings bonds are a low-risk savings product. During their lifetime they earn interest and are protected from inflation."

  • What is the current rate?

    • 7.12% Annualized for bonds issued November 2021 - April 2022, a new rate is set every 6-months

    • "The rate on your I bond changes every six months and may be higher now than at first. Example: In May 2021, a new I bond had a rate of 3.54 percent. In November 2013, a new I bond had a rate of 1.38 percent. However, in May 2021 the bond issued in November 2013—the bond that originally had a rate of 1.38 percent—had a rate of 3.74 percent. It had a higher rate than the May 2021 bond."

  • Are their holding requirements?

    • Must own for 1 year

    • Early redemption penalties:

      • Before 5 years, forfeit interest from the previous 3 months

      • After 5 years, no penalty

  • Is there a minimum or maximum?

    • $25 is the minimum

    • Each year you can purchase up to $10,000 electronically + $5,000 paper with federal tax refund

    • You can also gift beyond this to others

To purchase or for more information on I Savings bonds, go to Individual - Series I Savings Bonds (treasurydirect.gov)

Do your friends ask you financial questions? Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters and post them here.

Asking for a Friend - Can I invest in the DOW, S&P 500 and NASDAQ?

January 10, 2022

Q. On the news they report the DOW, S&P 500 and NASDAQ - what does that actually mean, and can I invest directly into those?

A. Excellent question!  You cannot invest directly into these indexes per say, but you can invest in ETFs and Mutual Funds that mirror these indexes.  Here is a brief explanation of what these indexes are, but understand there are so many other indexes that exist:

  • DOW - these are the 30 largest US companies (that’s right only 30 companies) and it is a price-weighted index (sum of all the stock prices for the 30 stocks divided by 30)

  • S&P 500 - these are the 500 largest US corporations by market capitalization (number of shares outstanding multiplied by the stock price)

  • NYSE - this is an index that tracks the 2,800 stocks listed on New York Stock Exchange based on market capitalization

  • NASDAQ - this is another exchange that stocks can trade on.  It has a high concentration of technology companies.  There are over 3,000 companies that trade on this market capitalized exchange.

  • EAFE - this is a market capitalized index that tracks the international market (Europe, Australasia, and Far East); it is comprised of 21 country indexes

  • Bloomberg Barclays US Aggregate Bond Index - not as commonly quoted, but should not be overlooked, this index covers a wide range for the US bond market.  It covers all the major types of bonds, such as Treasury, municipal, and taxable corporate bonds.

Do your friends ask you financial questions? Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters and post them here.

Asking for a Friend - What happened on Friday, November 26th?

11/29/2021

What happened on Friday, November 26th?
Why did the stock market go down so much?

This year black Friday was seeing red in the equity markets!  This was actually the worst black Friday in the equity markets on record.  So, what happened that caused this:

First the obvious, the new COVID-19 “Omicron” variant had FEAR (one of the short term drivers) elevated. It’s the fear of the unknown that sent the VIX (measure of volatility) souring Friday to 28, which is the highest it has been in 2-months. There was absolutely a flight to “safety,” as we saw bond prices rise while the stock prices fell.  Note, they did not rise and fall in equal ratio.  Part of the stock market pullback was also falling oil prices and travel related companies.  From there, it became a bit of a slippery slope, except for companies like Moderna and Pfizer, which both saw prices increase on Friday.

Second, the day was short. The equity markets close at 1 pm the day after thanksgiving AND it is typically a very low trading day, folks are paying attention to the deals, not the DOW. This can make a swing in any direction, up or down, more significant because the buyers are not stepping in to offset the sellers as quickly.

Our advice: Remember what happened in the Spring of 2020.  It’s best to act on facts, not short-term unknowns.  This is a buying opportunity in our opinion.

Do your friends ask you financial questions? Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters and post them here.

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