July 2022By Mark Fissel
Posted on July 20th, 2022
|With inflation, interest rate, and geopolitical fears taking the stage and reversing market advances in the beginning of 2022, the second quarter extended these trends. Fear of a recession began setting in as confidence in the Federal Reserve’s ability to coordinate a soft landing came into question.|
The first half of 2022 was the worst stretch for markets in almost 50 years, with a large sell off in both stocks and bonds. We officially entered a bear market in mid-June when the S&P closed at almost 22% lower than its January 3rd peak.
Most teenagers probably aren’t thinking about saving for retirement, buying a home, or even paying for college when they start their first jobs. Yet a first job can present an ideal opportunity to explain how a Roth IRA can become a valuable savings tool in the pursuit of future goals.
Rules of the Roth
Minors can contribute to a Roth IRA as long as they have earned income and a parent (or other adult) opens a custodial account in the child’s name. Contributions to a Roth IRA are made on an after-tax basis, which means they can be withdrawn at any time, for any reason, free of taxes and penalties. Earnings grow tax-free, although non-qualified withdrawals of earnings are generally taxed as ordinary income and may incur a 10% early-withdrawal penalty.
Probate is the process of proving the validity of a will and supervising the administration of an estate usually in the probate court. State law governs the proceedings in the probate court, so the process can vary from state to state. Supervising the administration of an estate can result in additional expense, unwanted publicity, and delays in the distribution of estate assets for a year or longer, which is why planning to avoid the probate process may be beneficial.
For the 12-month period ending in May 2022, the Consumer Price Index for All Urban Consumers (CPI-U) — the most widely used measure of inflation — increased 8.6%, the fastest pace in 40 years.1 The rate may trend downward as the Federal Reserve raises interest rates and supply-chain issues improve. But inflation is likely to be relatively high for some time.