Too Much Free Money in the Economy

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“The way to think about it is there’s not going to be a lot of relief on inflation because if we pump another $600 billion free cash, which is basically what ‘The Inflation Reduction Act’ is, into the market after putting $6 trillion of free money in — there’s a reason we have inflation. We just print too much money.”  Kevin O’Leary, Shark Tank

Key Points:

  • Federal government is printing too much free money
  • Supply chain is still broken
  • Perpetual Inflation – Inflation will continue around 6% to 8% due to increased demand and loss of purchasing power.

Adding more money to an already inflated economy won’t bode well for Americans and their families, O’Leary argued.  The Inflation Reduction Act won’t help the U.S. with its ongoing labor shortage, as the labor force participation rate sits at 62.2%, a slight tick downward from the prior month. There are nearly twice as many job openings in the U.S. as there are unemployed people. “Part of that is a result of just giving free money to everybody all of the time and saying, ‘Look, stay at home. Stay on your sofa,'” O’Leary said.

Reference:

  1. https://www.aol.com/finance/kevin-o-leary-inflation-just-140233627.html

Gratitude and Overcoming Limiting Beliefs

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Gratitude enables you to overcome your limiting beliefs.

Limiting thoughts and beliefs are false thoughts and beliefs that prevent you from pursuing your goals and desires. They can affect every aspect of your life from your wealth, health, relationships and emotional well-being. For example, if you believe you don’t deserve to be happy, you may never pursue your dreams or goals, and you will not be happy.
Gratitude in all things

Gratitude enables you to overcome and replace you limiting thoughts and beliefs with positive and abundant thoughts and beliefs. Further, your attitude, mood, behavior and thoughts improve when you practice gratitude.

The three keys to gratitude include :

  • Emote – to feel emotionally grateful
  • Extend – reach out and connect socially
  • Exercise – practice until it’s instilled

Be grateful in all circumstances, no matter what, both in good times and dark times. Although, it is easier to be thankful during good times than during hard times. The trials and sufferings in your life are there to strengthen you. They’re there for you to learn and grow.

Dr. Robert Emmons, known as the “world’s leading scientific expert on gratitude”, andis a psychology profession from the University of California, Davis and also the founding editor-in-chief of the Journal of Positive Psychology, found that being more grateful can lead to increased levels of well-being and that being grateful towards a higher power may lead to increased physical health. Giving thanks to those you are in a relationship with (not only your family) will strengthen the relationship.

Studies found that persons practicing gratitude showed more optimism in life, reduced stress, depression, and anxiety levels. It is a continuous loop.  The more you experience gratitude and say ‘thank you’  the more you will find in life to appreciate. When you choose gratitude over happiness even your self-control is stronger.

Research found that patients with heart failure showed reduced symptoms of heart failure and inflammation, improved sleep, and moods through keeping a gratitude journal.

Daily gratitude exercise

  • Reflect on three things your grateful for
  • Feel the gratitude in your body and
  • Extend the gratitude to others

When you practice gratitude, you change your thoughts and beliefs about yourself. You are happier and experience greater joy in life. And, when you change yourself, you change your perception of the world.

Be thankful for everything that God has given you. Apostle Paul declared, “I have learned the secret of being content in any and every situation, whether well fed or hungry, whether living in plenty or in want” (Philippians 4:12, NIV).

An attitude of gratitude and a spirit of thankfulness make all the difference. Thus, to change your life and your world, change your attitude and in all things, practice gratitude.

References;

  1. https://www.virtuesforlife.com/33-gratitude-affirmations-to-transform-limiting-beliefs/
  2. https://billygraham.org/story/how-to-be-thankful-in-all-things/
  3. https://lovegodgreatly.com/be-thankful-in-all-things/
  4. http://www.thelife.digital/tl/articles/gratitude-is-the-best-attitude/

“I am grateful to feel stronger, wiser and more confident with each new day.”

Feeling Good and Well-Being

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Feeling good means that your body and mind are working at their peak level, and you have a general sense of well-being.

To feel good day after day, according to David Rakel, MD, director of the integrative medicine program at the University of Wisconsin, means that your body and mind are working at their peak level, and you have a general sense of physical, mental and emotional well-being. Dr. Rakel suggests:

Practicing Mindfulness: Stay focused on the present moment.

When you stop, look around and be mindful of the present moment, this life is pretty amazing.

“If we can learn to recognize the clutter that our mind is in and learn to be more mindful of the present moment, that can be a tremendous asset to our overall sense of well-being,” Rakel says. The “clutter” that can make you feel bad includes regret about the past and worry that bad things might happen to you.

A practice called mindfulness can help you reduce the clutter by keeping your focus on the present moment.

Mindfulness is the basic human ability to be fully present, aware of where we are and what we’re doing, and not overly reactive or overwhelmed by what’s going on around us.

To be more mindful, try to:

  • Take in the colors, sounds, and smells that surround you at any given time.
  • Pay attention to your breath moving in and out of your body for a few moments.
  • Let worrisome thoughts flow out of your mind when they pop up, rather than giving them attention and dwelling on them.

Whenever you bring awareness to what you’re directly experiencing via your senses, or to your state of mind via your thoughts and emotions, you’re being mindful. And there’s growing research showing that when you train your brain to be mindful, you’re actually remodeling the physical structure of your brain.

Essentially, mindfulness lights up parts of our brains that aren’t normally activated when we’re mindlessly running on autopilot.

“Mindfulness is awareness that arises through paying attention, on purpose, in the present moment, non-judgementally,” says Jon Kabat-Zinn, creator of the research-backed stress-reduction program Mindfulness-Based Stress Reduction (MBSR).

Practice staying positive.

The definition of being positive is having hope and confidence in one’s ability to handle what’s tough, along with remembering that nothing is all negative all the time, states Angela L., editor for A-Lifestyle.com.

Shifting perspective can help you live a happier, more fulfilling life.

Being positive starts with changing your perspective on how you see things. The same event can happen to two people, and one views it as a positive and one views it as a negative. So try to see the good side of the things and people around you; it can help you stay free of anxiety and depression, Rakel says.

Research says that we have powerful capabilities to choose positive ways and emotions of thinking. Our emotions change our body at the cellular level. Rather than trying to get rid of negative feelings, we can choose to respond to them differently. To live a happier life, it’s essential to learn how to highlight the positive thinking and improve your outlook on life.

If you believe something is negative, then it probably will be (and vice versa). Challenge that negativity by embracing the mindset of a fixer and a doer. If there’s a will, there’s a way! That’s truly how to stay positive.

You can’t control what happens to you, but one things you can control are your perspective and how you respond. It’s up to you to look for the right side in everything and react most positively.

Make a spiritual .

As long as your happiness depends on things that are impermanent, such as new luxury vehicles or new homes, you will always be disappointed and unhappy over the long-term.

If you want to achieve long-lasting peace and serenity, then your spiritual practice must become a way of life.

Rakel defines this spiritual practice as spending time on “that which gives your life meaning and purpose.”This could be your spiritual beliefs, enjoying nature, or sharing moments with loved ones. “If we get up in the morning excited about something that gives us meaning and self-purpose, our bodies do all they can to heal,” Rakel says.

In short, your happiness must depend on something that is constant and consistent. One thing in your lives that is constant is the present moment, and this is at the core of spiritual practice.

Be around people.

Having good interpersonal relationships and a good support network of family, friends, coworkers, and other people who care about you can help you stay healthier, feel less stressed, and even live a longer life. Spend time with these people regularly, and work to keep your relationships with them strong.

References:

  1. https://www.webmd.com/balance/features/more-energy
  2. https://www.mindful.org/meditation/mindfulness-getting-started/
  3. https://thriveglobal.com/stories/12-simple-ways-to-stay-positive-and-happy/

CBD at a Glance

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CBD is short for cannabidiol (pronounced kan-a-bih-die-ole).

CBD is one of hundreds of chemical compounds found in cannabis plants. One large group of these compounds is known as cannabinoids. Scientists have identified more than 100 cannabinoids, including CBD.

Besides CBD, another compound found in cannabis is THC, short for tetrahydrocannabinol. THC is “pscychoactive,” meaning it produces a high, a feeling of euphoria. CBD does not have this property.

There is a lot of confusion and misinformation floating around on the internet about CBD, and cannabis in general. People observe claims on the internet that cannabis and cannabinoids being cure-alls for everything from Alzheimer’s to warts,

Studies and anecdotal experience suggest a variety of possible health benefits from cannabinoids such as CBD and THC—for example, easing chronic pain and anxiety—but researchers are still learning exactly which compound produces which effects, and what the risks are.

But, it’s important to point out that it might not even be CBD that’s responsible for therapeutic effects, writes Dr. Mallory Loflin, a research scientist with VA and assistant professor of psychiatry at the University of California, San Diego. It could very well be one of its metabolites [substances that are created when a compound is broken down in the body]. It’s also very likely that a lot of those other compounds in the cannabis plant have therapeutic benefit. However, it’s equally likely that a lot of them also interact with and suppress the effects of CBD, as well. The problem is that most of those other compounds have not been categorized in a systematic way, and there is very little known about their bioavailability, metabolism, actions, and effects.

The terms hemp and marijuana are associated with CBD, and there is much confusion as to their precise definitions. What’s important to know is that varieties of the cannabis plant that would be considered marijuana contain far more THC than do varieties that are grown as hemp. According to the 2018 Farm Bill, hemp that is grown legally in the U.S. can contain no more than 0.3 percent of THC.

CBD products can be derived from either “marijuana” or “hemp” varieties of cannabis—or they can be made synthetically in a lab. CBD can be used in various forms, such as oils, sprays, creams, gummies, and capsules.

Although CBD does not produce a high, until recently it was considered a Schedule 1 drug—in all its forms—and was subject to tight regulation. The 2018 Farm Bill loosened restrictions on CBD derived directly from hemp, as part of the bill’s legalizing of commercial production of hemp.

Currently, there are no hemp-derived CBD products that meet FDA criteria for research. The synthetic version being used in the VA trial and other forms of CBD being used in research are still classified as Schedule 1 drugs. As such, approvals for the research must be obtained from several agencies, including the Drug Enforcement Administration and the FDA.

References:

  1. https://www.research.va.gov/currents/0219-San-Diego-VA-study-testing-cannabidiol.cfm

Mindfulness

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Mindfulness is the basic human ability to be fully present, aware of where we are and what we’re doing, and not overly reactive or overwhelmed by what’s going on around us.

Mindfulness is about fully attending to what’s happening, to what you’re doing, to the space you’re moving through. It is the basic human ability to be fully present, aware of where we are and what we’re doing, and not overly reactive or overwhelmed by what’s going on around us.

The annoying fact that we so often veer from the matter at hand.

Our mind takes flight, we lose touch with our body, and pretty soon we’re engrossed in obsessive thoughts about something that just happened or fretting about the future. And that makes us anxious.

The practice of Mindfulness can help you overcome anxiety, worry and many of the stresses of life.

Mindfulness can be cultivated through proven techniques. Here are some examples:

  1. Seated, walking, standing, and moving meditation (it’s also possible lying down but often leads to sleep);
  2. Short pauses we insert into everyday life;
  3. Merging meditation practice with other activities, such as yoga or sports.

When we’re mindful, we reduce stress, enhance performance, gain insight and awareness through observing our own mind, and increase our attention to others’ well-being.

8 Facts About Mindfulness:

  1. Mindfulness is not obscure or exotic. It’s familiar to us because it’s what we already do, how we already are. It takes many shapes and goes by many names.
  2. Mindfulness is a thing we already have. We have the capacity to be present and we can cultivate these innate qualities with simple practices that are scientifically demonstrated to benefit ourselves and our love ones.
  3. You don’t need to change. Mindfulness recognizes and cultivates the best of who we are as human beings.
  4. Mindfulness has the potential to become a transformative social phenomenon. Here’s why:
  5. Anyone can do it. Mindfulness practice cultivates universal human qualities and does not require anyone to change their beliefs. Everyone can benefit and it’s easy to learn.
  6. It’s a way of living.  Mindfulness is more than just a practice. It brings awareness and caring into everything we do—and it cuts down needless stress. Even a little makes our lives better.
  7. It’s evidence-based. We don’t have to take mindfulness on faith. Both science and experience demonstrate its positive benefits for our health, happiness, work, and relationships.
  8. It sparks innovation. As we deal with our world’s increasing complexity and uncertainty, mindfulness can lead us to effective, resilient, low-cost responses to seemingly intransigent problems.

When we practice mindfulness, we’re practicing the art of creating space for ourselves—space to think, space to breathe, space between ourselves and our reactions.

References:

  1. https://www.mindful.org/how-to-practice-mindfulness/
  2. https://www.mindful.org/what-is-mindfulness/

Measuring Inflation

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The consumer-price index reached 9.1%, its fastest pace in nearly 41 years, as strong consumer demand collides with supply shortages. ~ Wall Street Journal

U.S. inflation accelerated to a 9.1% annual rate in June, its fastest pace in nearly 41 years. Consumers are seeing prices rise sharply for a variety of goods and services as strong demand collides with persistent supply shortages.

Inflation is one of the most vexing issues facing economists and government policy makers, and is a factor raising the risk of U.S. recession.

The current bout of inflation has several causes, many linked to the pandemic. For one, consumers have been flush with savings from government stimulus programs, leading them to open the spigot for goods that are in scarce supply.

Supply-chain disruptions have also persisted across the global economy, with Russia’s invasion of Ukraine and Covid-19 cases in China adding additional pressures. Energy prices have gone up sharply.

Fewer workers are in the labor market, encouraging those who are working to demand raises. And low interest rates from the Federal Reserve have made borrowing cheaper, making big purchases more attractive. The Fed is now moving rapidly to make borrowing more expensive, using the central bank’s primary tool of raising rates.

Inflation reflects the broad rise of prices or the fall in the value of money. It generally results from too much demand chasing too few goods or limited services, leading to broad price increases.

To measure inflation, Labor Department’s consumer-price index, or CPI, has become the established benchmark. It is calculated using a survey of households and only covers spending on goods and services. It excludes expenditures that aren’t paid for directly, such as medical care paid for by a person’s health insurance. Its limited set of expenditures can make CPI more volatile. 

The personal-consumption-expenditures price index, or PCE, takes into account a broader range of expenditures—and feedback from businesses—to provide a more expansive picture of price changes. This inflation reading is the Federal Reserve’s preferred measurement. The Commerce Department releases its PCE estimate monthly as part of its income and spending report. 

Ref:

  1. https://www.wsj.com/articles/inflation-definition-cause-what-is-it-11644353564?mod=article_inline

Stay the Course

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While volatility can be troubling for investors, financial experts caution against making any rash decisions when markets fall. Volatility can lead to opportunities to buy more of your favorite stocks and set yourself up for future gains.

Expect and accept volatility

You, as an investor, should accept market volatility — which is relatively common — as a normal part of the process of investing and the best way to outrun inflation, said certified financial planner Brad Lineberger, president of Carlsbad, California-based Seaside Wealth Management. “Embrace the volatility, because it’s why investors are getting paid to own stocks,” he said.

This means you should stay calm even through extreme movements. While stocks always move up and down, long-term market returns are still based on the same things: dividend yields, earnings growth and change in valuation, according to Zach Abrams, a CFP and manager of wealth management at Shaker Heights, Ohio-based Capital Advisors.

investors should worry about Jerome H. Powell, chair of the Federal Reserve. The Fed raised interest rates by a quarter percentage point in March for the first time since 2018 and projected six more increases this year.

“The market reaction in the past four to six weeks can almost all be attributed to the Fed and how interest rates have moved,” Mr. McMillan added. “There’s been very little response to events in Ukraine.”

Investors haven’t fully appreciated what rising interest rates mean for the stocks in the financial sector, especially banks and insurance companies, which have suffered from a prolonged stretch of near-zero interest rates, said Andy Kapyrin, the co-chief investment officer of RegentAtlantic. “The market hasn’t yet priced in the benefits financial stocks are going to see from higher interest rates,” he said. “Banks in particular can make a much higher interest-rate margin as short-term rates rise.”

Stocks that could suffer from higher rates include shares of small, emerging software and e-commerce companies and other capital-intensive tech firms that have depended on borrowing heavily at low rates until they can turn profitable, Mr. Kapyrin said.

Individual investors should maintain a long-term horizon even in retirement, which can last 30 years or more, said Simeon Hyman, a global investment strategist at ProShares. That means ignoring stock plays based on temporary upheavals.

“Historically, downturns in the equities market from major geopolitical events are fairly short-lived,” Mr. Hyman said. “If you look at what happened after 9/11, the global pandemic or the invasion of Kuwait, the downturns were measured in weeks or a couple of months.”

References:

  1. https://www.cnbc.com/2022/05/05/stocks-are-tumbling-heres-what-to-keep-in-mind-.html
  2. http://www.capstonefinancialga.com.advisor.news/staying-the-course-may-be-the-key-to-wartime-investing/

Price and Value Matter

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“Price is what you pay; Value is what you get.” Warren Buffett

The best investors tend to invest differently then the typical Wall Street and retail investors. The best investors don’t follow the crowd, or allow the emotions of fear or greed influence their savings, investing and building wealth decisions. Since, most people are in debt and are not building long term wealth.

They, the best investors, follow an analytical process to assess the value of an asset. They understand the difference between an asset’s value versus an asset’s market price. They understand that it matters how much you pay for an asset. And, they will not pay a price for an asset that far exceeds that asset’s value.

Emotional investing causes losses over the long term

  1. Buying assets at market peaks or all time high stock valuations
  2. Selling assets during times of high volatility and market corrections.

Avoid making the following investments:

  • If you don’t understand how a company or investment makes or loses money.
  • When the price of the stock (or investment) is greater than value of the company (or investment). It matters how much you pay for an asset.
  • If the asset class is at euphoric high.
  • When making investing decisions based on emotions or fear of missing out (FOMO), and you’re not being patient, disciplined and objective.

“The goal isn’t more money. The goal is to live life on your own terms.” Will Rogers

  • Freedom from work and trading time for money.
  • Freedom to live life intentionally and purposefully on your terms. You want the ability to take time off when you want and as long as you want.

Annually, financial planners and brokerage firms still make money off your money even when you lose money. Most financial planners, 95% of them, fail to outperform an index fund over a ten and twenty year period. No one can or has successfully predict the future, that’s why barely 5% of financial planners have out perform an market index fund over a ten to twenty year period.

Don’t forget, you will lose a large portion of your tax deferred retirement nest egg to federal and state taxes when you start withdrawing or commence taking required minimum distribution (RMD) from the accounts.

Cash flow is your monthly earned and passive incomes minus your monthly cost of living expenses.

References:

Everything Money

  1. https://www.magicformulainvesting.com

Qualified Dividends vs. Ordinary Dividends

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The distinction between Qualified and non-Qualified dividends has to do with how you’re taxed on those dividends.

  • Qualified dividends are taxed at 15% for most taxpayers. (It’s zero for single taxpayers with incomes under $40,000 and 20% for single taxpayers with incomes over $441,451.)
  • Ordinary dividends (or “nonqualified dividends”) are taxed at your normal marginal tax rate.

The concept of qualified dividends began with the 2003 tax cuts. Previously, all dividends were taxed at the taxpayer’s normal marginal rate.

The lower qualified rate was designed to fix one of the great unintended consequences of the U.S. tax code. By taxing dividends at a higher rate, the IRS was incentivizing companies not to pay them. Instead, it incentivized them to do stock buybacks (which were untaxed) or simply hoard the cash.

By creating the lower qualified dividend tax rate that was equal to the long-term capital gains tax rate, the tax code instead incentivized companies to reward their long-term shareholders with higher dividends. It also incentivized investors to hold their stocks for longer to collect them.

Qualified Dividends

To be qualified, a dividend must be paid by a U.S. company or a foreign company that trades in the U.S. or has a tax treaty with the U.S. That part is simple enough to understand.

Importance of dividends

From 1871 through 2003, 97% of the total after-inflation accumulation from stocks came from reinvesting dividends. Only 3% came from capital gains.”

To put this into perspective, take a look at the example used by John Bogle, where he writes: “An investment of $10,000 in the S&P 500 Index at its 1926 inception with all dividends reinvested would by the end of September 2007 have grown to approximately $33,100,000 (10.4% compounded). If dividends had not been reinvested, the value of that investment would have been just over $1,200,000 (6.1% compounded)—an amazing gap of $32 million.” The reinvestment of dividends accounted for almost all of the stocks’ long-term total return.

Dividends are an important consideration when investing in the share market as they provide a reliable source of return while you wait.

References:

  1. https://www.kiplinger.com/investing/stocks/dividend-stocks/601396/qualified-dividends-vs-ordinary-dividends

Commit to Building Wealth

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“Change your mindset and change your life.”

If you think you can improve your financial situation, you’ll do exactly that.

“Change your mindset around wealth,” said Mandi Woodruff-Santos, co-host of the “Brown Ambition” podcast. “Tell yourself it’s possible to build wealth, that you can learn anything, and that you can do it! Once you begin to internalize your ability to build wealth, it makes it easier to take the steps needed to increase your earnings, start investing and learn along the way.”

It’s important to realize that no one is going to change your life for you. you must make the decision to learn, to grow, and to improve your life. The most important thing is that you get started!

There are five areas to work on in order to create the most efficient and effective change to your mindset – Your beliefs, fears, perspective, self-talk, and support.

CHALLENGE YOUR LIMITING BELIEFS

Limiting beliefs are the stories we tell ourselves about who we really are: shy, overweight, undeserving of love or success. But, they can be replaced with empowering beliefs.

Nearly everyone has some measure of limiting beliefs that prevent them from realizing their dreams and achieving great milestones. Those who are able to challenge and overcome them go on to achieve their goals. Those who don’t continue to live in negative patterns – and often don’t even realize it.

By rebuilding a positive set of habits, we are able to reach new levels of success* in all aspects of our lives.

FACE YOUR FEARS

When we have identified and gotten honest with ourselves about our belief system, we can then go deeper by really examining our fears. When we examine our fears, we ask ourselves questions like; what is the surface level fear? Where is it coming from? Is it a real or perceived fear? What is the underlying fear? What can I do to change my experience of it? And other such questions.

Fear is a destructive emotion; we often carry fears that we don’t need to. Overcoming your fears is a major step toward how to change your mindset for success.

SHIFT YOUR PERSPECTIVE

Learning how to change your mindset can seem overwhelming, but it doesn’t have to be. Sometimes all it takes to change your mindset forever is the smallest shift in the way you see the world. One choice that we can easily make is the meaning that we give to our experiences. Tony Robbins says, “Nothing in life has any meaning except the meaning I give it.” Do we see challenges as obstacles – or as opportunities?

When we start to make changes to our perspectives, we consider things like; how am I responding to situations? What am I doing, what am I thinking, what meaning am I giving things that I experience? When it comes to our perspectives a small shift with massive results.

CHANGE YOUR SELF-TALK

When you’re thinking about how to change your mindset, do you find yourself mired in negative thoughts? If you do, focus on your language to change your mindset. Change your self-talk starting with how you begin your day. If you plant positive language in your head at the beginning of the day, you’ll feel more energetic. You might find it effective to make a mantra for yourself, depending on how you’re feeling.

Change your mantra as often as you need to, in order to maximize your own power. In addition, remember that it’s okay to need to correct your course many times during the day.

To keep your positivity flowing, surround yourself with people whose mindsets reflect where you want to be. And remember, setbacks are normal. Bounce back from setbacks by reminding yourself why you want to change.

GET SUPPORT

Find some like-minded people whom you can share your experiences with, learn, and grow together.

These days it is pretty easy to find a group or forum online though you might need to try a few before you find a community that really resonates for you. In time many of the people in your life will see you grow and change and want to know more but for now, just find a few people who want to create change in their mindset (or have already done so) and enjoy the process!

References:

  1. https://finance.yahoo.com/news/top-expert-money-advice-better-230111509.html
  2. https://www.gobankingrates.com/money/wealth/top-expert-money-advice-for-how-to-better-build-your-wealth/
  3. https://www.linkedin.com/pulse/how-changing-your-mindset-can-change-life-the-mind-and-body-co/