Permanent Value

Week in Review – November 23rd 2015

Bruce Doole
November 23rd, 2015

Save Now for College. It Pays.

You should save money for college expenses if you possibly can. And if you’re worried about how that savings might hurt your child’s financial aid eligibility, then you’re thinking about it wrong.

This is a persistent and mostly mistaken belief. While there is a tiny germ of truth to this supposed financial aid penalty, the consequences of upper-middle class people not saving much are evident in the presidential campaign financial disclosures.

Every family lucky enough to have some spare money and savings options does what it does for its own reasons. But no one should choose not to save out of ignorance of how the system actually works.

Let’s start here: The awarding of financial aid is a mix of science and art. It is enormously complicated, and it’s not your fault if you don’t understand it. It is true that families with even higher incomes are qualifying for some financial aid purely on what they can afford; although those with healthy earnings probably won’t qualify for a lot of need based grants and scholarships.

The process begins with filling out the Free Applications for Federal Student Aid, otherwise known as FAFSA. The government determination of your Expected Income matters more than bank accounts when applying for aid.

The Expected Family contribution, or EFC formula, is intricate but the things it emphasizes are clear. Your income matters much more than your savings. The EFC will suggest that you should devote a sliding amount up to 47% of your income to college expenses in any given year, though it will count only up to 5.64% of the parent’s assets.

In 2013-2014, students and their families borrowed $106 billion in that period compared with the $48 billion schools gave away. Don’t bet on these expensive colleges to help you out with grant money once your child is ready to enroll.
– Source: Rob Lieber


  • Great Britain CPI rose 0.1% in October, but left the annual inflation rate changed at -0.1%.
  • U.S. Consumer Price Index rose 0.2% in October, meeting expectations.
  • U.S. Industrial Production fell 0.2% in October, but the manufacturing component rose a higher-than-expected 0.4%.
  • Bank of Japan Announcement: Japan left its policy unchanged despite data earlier in the week indicating that the country has fallen into a technical recession for the second time in two years.
  • U.S. Housing Starts fell a steep 11.0% in October, far below experts’ estimates.
  • U.S. FOMC Minutes indicated that while a rate hike in October was not appropriate, conditions for a rate hike could be met in December.
  • Great Britain Retail Sales matched expectations for a 0.6% monthly percent fall in October.
  • U.S. Jobless Claims fell 5,000 to a nearly as expected 271,000 in the Nov. 14 week.
  • Canada CPI edged up 0.1% in October and was up 1.0% on the year.
  • Canada Retail Sales retreated 0.5% in September, following four months of gains.

Source: Ivy Fund 

Week in Review – 11/16/15

Bruce Doole
November 16th, 2015

How to Spend Less This Holiday Season

The only way that people can prevent themselves from going overboard during the holiday season is to make a budget. Figure out how much money you can comfortably spend on your holiday shopping this year and then divide that by the number of people you need to shop for. If you’re worried about surprise gift swaps or last-minute additions, build some extra recipients into your count.

Knowing roughly how much you can actually afford to spend on each person’s gift will help you steer clear of pricier presents that could easily push your total above your set amount. Buying gift cards is also an easy way to keep track of spending and ensure you don’t go overboard.

If you’re still worried about being tempted, try taking out the total amount you want to spend this holiday in cash, suggests Paul Dolce, a financial planner in Dublin, Ohio. Keep this cash separate, either in a single envelope or in a series of envelopes — one for each recipient. Then pay for all your gift purchases with just this money; don’t swipe your credit or debit card. Once you’ve spent all the cash you’ve withdrawn, he warns, you’re done.

Many credit unions (and some banks) offer targeted savings accounts, which allow you to contribute little by little throughout the year, and then withdraw the money at holiday time to spend on gifts as well.

You could even implement the concept on your own by creating a separate savings account. Determine your spending plan and divide the total amount by 12, then set up monthly transfers to move the money from your checking account.

These accounts are “a great way to avoid foreseeable financial surprises, such as extra spending at Christmas,” Reilly says. “You can establish how much you want to spend [in advance], outside of the emotions — and ads — of the holiday season.

“Better yet,” he adds, “set your budget in the aftermath of Christmas, while you’re still feeling bad about how much you just spent on gifts.”

–  Source: Kerri Anne Renzulli,


  • Canada Housing Starts lost some traction in October as starts fell from September’s slightly firmer revised seasonally adjusted annualized rate of 231,304 units to a marginally softer than expected 198,065 units.
  • Canada CPI was down 0.3% for the month of October, but up 1.3% from a year ago.
  • China Industrial Production gained 5.6% on the year in October, below expectations of a 5.8% increase. On the month, output was up 0.46%.
  • Great Britain Labour Market Report was a little softer than expected in October. Claimant count unemployment was up a larger than anticipated 3,300 in October but this was effectively offset by a near-equivalent downward revision to September’s increase, which now stands at just 500. The unemployment rate in October was steady, as expected, at 2.3%.
  • European Union Industrial Production was soft in September. A 0.3% monthly decline in output (ex-construction) comfortably undershot market expectations and left production at its lowest level since January.
  • U.S. Jobless Claims held unchanged at the 276,000 level for the highest 2-week run in two months.
  • European Union GDP Flash grew at a sluggish 0.3% quarterly rate for the third quarter.
  • U.S. Retail Sales slowed in October, led by a slow-down in automobile purchases. Sales rose by a weaker-than-expected 0.1%.

Source:  Ivy Fund 

Week In Review – November 9th, 2015

Bruce Doole
November 9th, 2015

Older Parents Squeezed Between Paying for College, Retirement (2/2)

An increasing number of parents put off starting a family until they feel they’re on solid financial footing, but new research released Monday by Allianz Life found many still worried about paying for college and funding their own retirement.

As part of its LoveFamilyMoney Study, Allianz looked at families in which one parent was older than 40 and at least one child in the household was under age 5. It defined this cohort as opposite-sex couples who were married or living together, with fewer than 10 years’ age difference between the partners.

Allianz noted that the number of first-time mothers in their 40s rose by 35% between 2000 and 2012, according to an analysis of Census Bureau data by the Centers for Disease Control and Prevention.

The long-term trend was even more striking, Allianz said: in 2012, there were nine times more first-time births to women over 35 compared with 40 years before.

Researchers found that 58% of the older parent families had invested their money, and 73% expressed pride in what they had accomplished financially.

Forty-eight percent considered themselves to have excellent or above-average knowledge about financial planning.
Even so, 59% said a top worry was figuring out how to invest their money.

Sixty-nine percent described themselves as “savers,” and 60% said their spouse was a saver as well.

In another finding, a quarter of parents in their 40s said they would not consider using a financial professional, and only 45% said they had used one in the past, compared with 53% of traditional families.

Of those who currently used or had used a financial professional in the past, 64% said it was to manage an investment portfolio.

Sixteen percent of older parents said they did not have time to spend on creating a long-term financial plan, more than twice as many as traditional families who said this.

“We found mixed messages in the data from our older parent group,” Libbe said, adding that “they can’t let personal financial planning wait too long — pretty soon they’ll be juggling the competing demands of their own retirement and their children’s education.”

Fifty-three percent of older parents said they would be motivated to create a long-term financial plan in order to save for their children’s education, and 45% would do so in order to create a comfortable retirement.

Source: Michael S. Fischer, Think Advisor


  • France PMI Manufacturing Index performed much as originally reported in October. The final sector PMI weighed in at 50.6, just a tick below its flash reading and equaling its final September mark.
  • U.S. ISM Manufacturing Index skirted near contraction at 50.1 in October versus 50.2 and 51.1 in the prior two months.
  • Great Britain PMI Construction had another good month in October. At 58.8 the headline index was down from an unrevised 59.9 in September but in line with market expectations.
  • European Union PMI Composite output index weighed at 53.9, just 0.1 points below its flash estimate and 0.3 points above its final September mark.
  • U.S. International Trade deficit for September came in very near expectations, at $40.8 billion versus the Econoday estimate for $41.1 billion.

Ivy Fund