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The Flyer:

by Propel Financial Advisors

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Keeping Cash on the Sidelines Can Cost You Thumbnail

Keeping Cash on the Sidelines Can Cost You

We've had countless conversations with clients this year about the importance of getting their cash off the sidelines. Yes, money markets and high-yield savings accounts are paying great rates compared to just a year ago. This is great news for your short-term cash needs. But what about for longer-term cash?

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Rising Phoenix or Worm Food?  The Future of Real Estate in a High Interest Rate Environment Thumbnail

Rising Phoenix or Worm Food? The Future of Real Estate in a High Interest Rate Environment

While it is true that REITs are under scrutiny during this unique economic environment, I do not think it makes sense to count them out just yet. In a recent webinar, Summer Money Vibes, one of our clients asked a good question. He wanted to know if the high interest rate environment meant that real estate was a bad investment. As always, let’s look at rates in context rather than just this moment in time. The below graph shows average mortgage rates from 1971 through August of 2023 – about a 50 year period. You can see from the graph that the rates we enjoyed from 2001-2020 are the lowest in the fifty-year period presented. The historic low occurred around December of 2020/January of 2021. Over the course of the past 2 ½ years, the purchase of a home with a 30-year mortgage increased to a hefty rate of about 7%. While that number is painful for those of us who have only been buying homes over the past 20 years, you can see that is in line or below the median rate of 7.41%.

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Cheapest is Not Always Best Thumbnail

Cheapest is Not Always Best

Have you ever walked into a store looking for a specific product and find a few different options? You may opt for the cheapest option because it will probably work just as well as the more expensive one. When our CPA Emily Agosto worked at a hardware store as a teenager, she saw many customers face this choice. Her store offered two hammers for sale: a cheap store brand and a superior, albeit more expensive, brand. Which one did customers typically buy? If you guessed the cheap one, you’re right. They figured the cheap hammer would get the job done for what they needed to do. After all, how much difference could there be between hammers?

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Retirement Tax Buckets: Plant the Right Seeds this Spring Thumbnail

Retirement Tax Buckets: Plant the Right Seeds this Spring

Traditional retirement accounts like employer-sponsored 401(k)s are a large part of retirement savings, but there are benefits to using multiple account types. Contributing to accounts outside of your employer’s 401(k) not only gives you greater investment choice, but can free you from: age restrictions on withdrawals, administrative burdens of RMDs, and valuable tax flexibility.

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Social Security Planning:  Why It Requires More of Your Attention Thumbnail

Social Security Planning: Why It Requires More of Your Attention

Social Security has gotten a lot of attention in the media recently. As a result, I answer questions from clients regularly that primarily ask, “Will Social Security exist when I retire?” The answer is yes, of course, for two main reasons: 1) The federal government owns a printing press for currency as was demonstrated spectacularly during the COVID crisis; and 2) the younger workers (which is a rather large group of people making more money than you did) are paying more into the system. Thus, it is important to be aware of the rules that surround your benefit. Too often, folks file for Social Security without doing any planning whatsoever. We cannot stress enough the importance of understanding how your benefit will impact you.

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Watch Out for the Bond Market Thumbnail

Watch Out for the Bond Market

Most financial media keeps their focus on the stock market, but the bond market can be a significant portion of an investment portfolio and a major driver of returns. This often overlooked asset has the potential to be exciting this year. The bond market turned heads in 2022 by putting up its worst year for returns since1926. One might think that means that bonds can only move up from here. But will they? To start, fixed income is paying income again! As the chart below illustrates, an increasing share of the bond market is paying north of 4% yields now. This is significantly more than we've seen over the past decade.

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