As expected the Federal Reserve voted to keep interest rates unchanged at its most recent Open Market Committee meeting last week. This comes after four rate increases in the Federal Funds Rate since they began raising interest rates in December of 2015.
The Federal Funds Rate remains at 1.25%. The next FOMC meeting is scheduled for September 19-20 when many Fed watchers predict another increase or possibly a change in tactics.
Last week I wrote about an investing strategy called dollar-cost-averaging – the act of systematically buying more shares of your favorite stock or mutual fund in regular amounts every week or month. Generally, dollar-cost-averaging works best when markets are volatile and trending downward or sideways. With each new investment you end up buying more shares at lower prices, lowering your average cost per share over time.
The concept of dollar-cost-averaging – the act of investing regular amounts in a systematic way every week or month – has been around for a long time. If you take $100 from each paycheck and add it to a stock mutual fund in your 401(k) every pay period, you are dollar-cost-averaging. If you add $500 every month to a mutual fund in your IRA, you are dollar-cost-averaging. You get the idea.
When markets decline, especially if they are quite volatile, dollar-cost-averaging can be a great strategy. It effectively forces you to buy more shares when prices are low and fewer shares when prices are high. Every month you continue to add more to your investment plan regardless of whether the market is up or down. This strategy takes the emotions out of investing and can result in a lower average cost per share of your favorite stock or mutual fund.
In 2016 the Department of Labor enacted new rules and regulations that will affect financial advisors who work with retirement assets like IRAs. In case you were wondering, that’s pretty much the entire industry.
On April 10th those changes were to go into effect.
Well, that was the plan anyway. Less than a week before the new rules were set to become law, the DOL delayed implementation of the fiduciary rule by 60 days.
Google, Netflix, Facebook, Amazon, Twitter, LinkedIn and now Snapchat. The list of “hot” companies that have gone public in recent years is long indeed. Not surprisingly, when popular companies go public the interest in purchasing shares of their stock at the Initial Public Offering or IPO always spikes.
Who wouldn’t want to get in on the ground floor of what may be the next big thing?