Our Blog

DWM is committed to learning for its team, clients and friends. In this changing world, it’s extremely important to stay current in all areas impacting your financial future.

We encourage all of team members to “drill down” on current topics important to you and contribute to our weekly blogs.  Questions from our clients and their families are often featured in our blogs.  

Financial literacy for clients and their families is very important to us.  We generally hold an annual wealth management seminar for all of our clients.  We encourage regular, at least semi-annual, meetings in person with our clients to review family updates, progress on financial goals, asset allocation and performance of investments.  We’re happy to assist younger members of the family as part of our total wealth management program.

Here’s our latest blog:

 

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Don’t Waste One Drop of Summer!

Written by Les Detterbeck.

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Summer is here. Perhaps you’ll take a vacation. Great! But, beyond that, what’s on the rest of your summer bucket list? Don’t waste one drop of this very special season. Here are some possibilities:

Relax

  • Nap in a hammock
  • Sit on a porch swing
  • Watch the sun rise and/or set from a beach
  • Bring a blanket and lie on the grass at an outdoor concert

Devour special summer foods

  • Make homemade ice cream
  • Pick berries and peaches at a farm
  • Make lemonade from scratch
  • Dig your own clams
  • Buy a creamsicle from the neighborhood ice cream truck

Do something nostalgic

  • Ride a roller coaster
  • Play miniature golf
  • Go to a “final tour” concert
  • Go to the state fair

Experience the great outdoors

  • Go fishing
  • Go kayaking or paddle boarding
  • Go camping (or glamping, if the outdoors doesn’t suit you)
  • Go on a nature walk
  • Take a group to a water park

Do something out of the ordinary

  • Take a last minute, improv road trip
  • Go to a baseball game
  • Clean the clutter in your house and take it to Goodwill
  • Make a playlist of all of your favorite songs. Take a drive and sing them at the top of your lungs.
  • Plant a garden

Give back to your community

  • Volunteer at a local animal shelter or even adopt a new pet
  • Perform random acts of kindness
  • Write a soldier a letter
  • Bake cookies for a neighbor

All of the above would be fun.   In addition, how about adding personal growth items to your summer bucket list? These activities can enhance the quality of your life and contribute to the realization of your dreams and aspirations. Hence, these should add to your long-term happiness. Not only that, life-long learning can be fun. Consider the following:

Reading/Listening

  • Fiction and non-fiction, best sellers and classics
  • Read a book you normally wouldn’t read
  • Download an audio book or two and listen to it while driving, exercising or walking
  • Download podcasts and listen to those

Health

  • Try to do 30 minutes of exercise every day
  • Use a workout “buddy” for the summer
  • Modify your workout routine by cross-training in the summer
  • Eat fresh fruits and vegetables whenever possible

Career

  • Work towards further expertise and/or an advanced degree in your profession
  • Work on personal skills such as writing, communication and time management
  • Help complete summer projects for the development of your company

Family

  • Discover your ethnic roots-do a DNA test and have your relatives do one too
  • Chart your family tree (and get everyone involved)
  • Interview and record an older family member and preserve their family stories
  • Attend or host a family reunion

Take some quiet time to define your happiness

  • When are you most happy?
  • How often are you engaged in your passions?
  • What accomplishments are you most proud of?
  • What will be your legacy?

We hope you all have a wonderful summer, perhaps take a vacation, have fun and attain some personal growth. The combination is priceless. The summer solstice on June 21 is one week away. Labor Day will be here before we know it.   Happy Summer! Don’t waste one drop of it!

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Rates keep going up! Should I Still Buy That McMansion I’ve Been Dreaming of??

Written by Grant Maddox.

 

BMIFeature-Rising-Rates-Minimal.pngThe ultra-inexpensive era of mortgage rates is coming to an end, and quickly. Mortgage rates have reached unprecedented 7-year highs. The average 30-year mortgage this week will cost consumers 4.7%, up nearly a full 1% from 2016.

While a 1% increase may not seem like the end of the world, it is important to realize the effect this may have over the course of a mortgage. Consider a consumer who purchased a home with a $200,000 mortgage in 2016. Assuming a 3.7% interest rate, this would amount to a principal and interest monthly payment of $921. In today’s environment, the same consumer may have a monthly payment of $1,037. Over the life of a conventional 30-year mortgage, today’s consumers may pay $41,760 more than those who locked in a rate in 2016.

Reviewing rates in today’s environment may leave some consumers discouraged. However, in comparison to many historical rates, today’s rates are actually relatively low. Take 1981, for example, when the average 30-year mortgage rate was 16.64%. Using a 16.64% interest rate, a $200,000 mortgage in 1981 would cost the consumer $2,793 per month, or, over the course of 30 years, $632,160 more than a consumer today.

For those looking to purchase a new home, the question remains: Is now a good time to buy? The answer is not so simple. There are a few factors to consider before determining if it’s the right time to buy for you.

First of all, as the economy improves overall, mortgage rates are likely to continue to increase. The culprit behind increased mortgage rates is actually surging wage growth. According to the Census and Bureau of Labor Statistics, average household income is at an all-time high, while mortgage rates have been laying low—until now. As wage growth continues to increase the money supply to consumers, consumer spending power increases. Unfortunately, increased consumer spending also increases demand for goods and will ultimately raise the price of goods–inflation.

With the expectation of rising inflation comes a steady increase in the yield of the 10-year Treasury note. The yield on the 10-year Treasury note, which usually affects the 30-year mortgage rate, has risen to its highest close since 2011, ending up at just over 3.1%.

In addition, the Federal Reserve has indicated that it will be raising short-term rates at least three to four times this year alone, and potentially several more times in the coming years.

Current home owners should also not expect to refinance anytime soon. As rates rise, the group of homeowners who would benefit from or be eligible for mortgage refinancing has decreased drastically by 46% this year, according to Black Knight Inc.—the smallest group since 2008.

But with mortgage rates trending upward and no sign of lowering again in sight, many people are choosing to strike while they still have the chance.

Overall, your decision depends on if you want to wait it out and hope that mortgages rates will decrease again, or if you want to buy now while the rates are still relatively low, even with the 1% jump. One effective tip to help counteract for the increase in mortgage rates is to lower your price range accordingly and look for a house priced lower than what you would have pursued had mortgage rates remained at their lowest point.

Of course, there are many other factors besides mortgage rates which may affect a consumer’s decision to purchase a home. For example, economic factors such as rising rents, home appreciation, and predictable monthly housing payments.

Bottom line: Rising rates are expected to continue for some time, so it is important to weigh all factors at play and make the decision that’s right for you today and in the future.

 

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First Grexit, Then Brexit, Now Itexit?

Written by Les Detterbeck.

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The future of the EU is in question again- for the 3rd time in 4 years. In June 2015, the Greek financial crisis brought us Grexit. Two years later, the Brexit vote passed. And, now we may have Itexit. The political turmoil in Italy could result in Italy renouncing the euro and reviving the lira. Italy was a founding member of the EU and its exit could cause severe economic disruptions worldwide.

The two parties that won the March 4th Italian elections, the Five Star Movement and the League, have been hostile toward EU rules and the interference by Brussels in Italy’s affairs. They joined forces to form a government and proposed euroskeptic Paolo Savona as their choice for economics minister. Mr. Savona co-authored a blueprint for Italy to leave the EU. Current Italian President Sergio Mattarella rejected Mr. Savona and effectively collapsed the attempt to form a government. Mr. Mattarella’s Democratic Party has supported staying in the EU and was a big loser in the spring elections. Now, it looks like new elections later this summer are likely, which could amount to a referendum on Italy remaining in the EU.  

In 2015, Greek voters overwhelmingly rejected EU bailout terms requiring austerity. Greece defaulted on some of its debt and ultimately agreed to a third bailout, worth $100 billion, which imposed further cuts on spending. Grexit proved to be a powerful force for the Eurozone to work together and develop closer ties and more consistent and tougher fiscal rules. Greece is on schedule to be free from the burden of bailouts in August.

The UK is scheduled to withdraw from the EU on March 29, 2019, with a 21 month transition period out to December 31, 2020. Despite delays in negotiations, the UK government and UK opposition party say Brexit will happen. Since Brexit, the British pound first slumped, then regained its losses against the U.S. dollar, but has remained down 15% to the euro. Bank of England Governor Mark Carney indicated that Brexit has reduced UK GDP by $60 billion already. There is an ongoing debate as to what the relationship between the UK and the EU will be post-Brexit. If there is no agreement on trade, the UK would operate with the EU under World Trade Organization rules, which could mean customs checks and tariffs on goods as well as longer border checks. It could also mean Britain losing its position as a global financial center and its citizens living in other parts of the EU will lose their residency rights and health insurance. The next negotiation summit will be this June.

Before the euro, Italy had the power to raise or lower interest rates on their currency to impact its value. A cheap lira made Italian exports less expensive around the world, strengthening their economy at home. But, with the euro, Italy has no control over interest rates or prices. The populists, who did well in the recent elections, complained that their spending power has declined with the euro and EU membership has undermined Italian sovereignty. However, now Luigi di Maio, leader of the Five Star Movement, has said his party never supported leaving the euro.

Many experts agree that if Italy left the euro, it would be poorer, likely default on its debts and the lira would become greatly devalued. A default could lead to retribution from other countries and potential asset freezes and economic isolation. If this occurred, the trustworthiness of the euro as a currency would be questioned and the impact could destroy confidence in the EU itself.

Let’s hope Italy stays in the EU. The UK is starting to realize that the populism that brought Brexit can be quite expensive and painful. The Greeks certainly didn’t like austerity, but the tough rules of the EU put their country in a better spot. Itexit would harm Italians, the EU and the world. Let’s hope if there is a referendum, the Italians will vote for the greater good and stay in the EU.

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