Joe Lucey

Some high school students painstakingly work to perfect their college applications and essays with the dream of going to the best school possible, for the best life possible. Others may not have to try as hard to achieve that goal. New data shows that the family you are born into has a significant impact on what college you get into and even your earning potential in the future.

If you have a child or grandchild applying for college in the near future, bear in mind these statistics from a study led by Stanford University economist Raj Chetty:

• Legacy admissions can have a big impact on who gets accepted to college. At Harvard, more than a quarter of students in its most recently admitted class have a relative among alumni.
• It’s harder for low-income students to build an ideal college resume. Many of the economically challenged have to work part-time jobs and have less time for studying and extracurricular activities than their upper-income peers.
• Students from the top 5 percent of wealthy families have a 60 percent better chance of reaching the highest echelon of wealth in this country than students from the bottom 5 percent, even when they attend the same prestigious university. This could be due, in part, to their lack of an influential network in the business world.
• Graduates of second-tier colleges who major in STEM (science, technology and math) subjects are capable of earning, on average, salaries on par with Ivy League graduates.
• Mid-tier public universities like those in the California State system and the City University of New York have proven most successful at transforming students from the lower 20 percent of income-earners to the top 20 percent.
• Regardless of family income, Ivy League (and similar) graduates have a roughly equal chance of becoming top 20 percent income earners.

 

In recent years, inflation in the United States has remained below the Federal Reserve Bank’s target rate of 2 percent, despite the agency’s efforts to jumpstart economic growth with low interest rates. However, the election of Donald Trump infused the markets with the spark they needed. After an initial drop attributed to uncertainty, the stock market responded with outperformance in the weeks following the election results. Part of this response was in anticipation of the Trump administration’s promises for changes in fiscal policy, such as tax cuts and larger investment in the country’s infrastructure — which could involve issuing new debt.

The first phase in a period of economic growth is called “reflation,” which many economists believe we have now entered. Some of the tools the government deploys to activate reflation include lowering taxes and changing the money supply, both of which appear to be on the horizon.

Signs of reflation include higher prices for consumer goods and higher wages to pay for them. With the low unemployment rate, businesses likely will need to increase compensation to compete for qualified candidates. At the same time, the Fed has already raised interest rates and indicated it will continue to do so, which will increase borrowing costs. In turn, those increases could be passed on in the form of higher prices.

Further, higher wages promote consumer spending, which in turn means higher prices, leading to higher corporate profits. This is a crucial circle for the reflationary phase, which eventually leads to inflation. How much inflation the economy can sustain generally is dependent on whether companies can continue to support higher wages via price increases or a slight reduction in profit margins.

Reflation also can impact investors: Rising interest rates cause existing bond prices to drop. New bond issues will feature the new, higher-interest yields, thereby de-valuing older bonds. In this environment, some investors choose to sell their bonds in favor of either higher-yielding bonds or dividend-paying cyclical stocks. These are called “reflation trades”, because they are made with the expectation that inflation will rise.

Remember, it’s important for individuals to focus on their specific financial goals rather than react to the changing economic environment. If you are considering making changes, please consult with your financial advisor to help assess how any changes might impact your long-term goals.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

You wouldn’t want a symphony comprised exclusively of flutists. A football team with nothing but offensive linemen is not likely to win many games. By the same token, it takes all types of people to run a company. When a business seeks to employ only workers who “fit” its corporate culture, it could end up missing out on some key characteristics for success.

Researchers have delved into the impact of different kinds of temperaments. They often refer to a person’s disposition as his or her emotional intelligence or emotional quotient (EQ), which sums up interpersonal skills such as sociability, sensitivity, adjustability and prudence.

These characteristics can play an important role in the work environment. For example, a person with a high EQ is generally perceived as proficient at following rules and procedures and getting along with others. These employees tend to score high in leadership roles, job performance, job satisfaction, and physical and emotional well-being. On the surface, it may be easy to understand why a company might look to hire only people with a high EQ.

However, there are some downsides to having a work environment filled with people with high EQs. For example, people with a higher EQ tend to exhibit lower levels of creativity and innovation. Creative types frequently are stereotyped as moody, nonconformist, excitable and even hostile. But the fact is, their impulse to challenge the status quo is one of the features of out-of-the-box thinking that many companies need to stay competitive.

High EQ people may also have issues giving or receiving negative feedback, which can impede their ability to lead and manage others. Researchers say they are so steady and well-adjusted that they may not give much credence to negative feedback they receive.

People who tend to get along well with others also may be so focused on maintaining good relationships that they do not excel at being change agents, driving results or making unpopular decisions for the good of the company. In other words, a high EQ person is more likely to “play it safe” and miss out on higher-risk but higher-reward opportunities.

This is why it often takes a wide variety of personalities to drive a successful company. One solution is to match the disposition of workers to the role they will fulfill. A person with a high EQ may excel in positions such as salesperson, customer support and account liaison. An employee with a lower EQ may be better suited for responsibilities related to creativity, innovation, leading change or taking risks.