Financial Views Newsletter – Summer 2022
Like waves breaking on the shore, the economy regularly moves through several stages of growth and decline. Known as the business cycle, this pattern has a direct impact on stocks, bonds, profits, and corporate earnings–and of course, on your investments too.
What is the Business Cycle?
The business cycle (also known as the economic cycle) refers to the expansion and contraction of economic activity over several months or years. Consisting of five phases–expansion, peak, contraction, trough, and recovery–business cycles follow a consistent pattern, even if they do not follow a consistent time frame. Recoveries and recessions alike can last years or months. Australia, for example, enjoyed a 29-year period of expansion beginning in 1991 and declining in 2020 as the COVID-19 pandemic hindered economic activity worldwide.1
Peaks and Valleys
The National Bureau of Economic Research’s Business Cycle Dating Committee releases regular statements about the economic cycle based on a number of factors, including gross domestic product, interest rates, household income, and employment rates, to name a few. The NBER considers expansion to be the normal state of the economy. When “a significant decline in economic activity that is spread across the economy and that last more than a few months” occurs, the Committee considers the economy to be in a recession.2
Riding the Wave
Hearing news coverage about the possibility of an upcoming recession can be alarming, but knowing that economic cycles operate in waves of expansion and contraction can keep support investors’ emotions in check. Of course, investors want to make smart decisions to support the health of their portfolios throughout the economic cycle. Your True Vision advisor can strive to ensure that your portfolios–and your comprehensive financial plan–are equipped to help you ride the next wave.
Meet Client Service Representative, Lisa Bartholomy
Lisa joins the True Vision team with twelve years of experience in the financial services industry. She began her career as a receptionist, and grew into the role of senior client service associate supporting multiple advisors. Lisa enjoys engaging with clients on a daily basis and getting to know them personally. A natural teacher and organizer, Lisa is passionate about delivering the best to clients. Lisa and her husband, Jeff, have two children and reside in Forest Lake, MN. Her interests are boating, golfing, and music.
Lisa is excited to have found her work family at True Vision. Welcome, Lisa!
Planning for Education Expenses
In back-to-school season, planning and budgeting for education is top of mind for many families. Your advisor can help you start planning today by estimating expenses, choosing an account, and offering financial education for the whole family.
Estimate Expenses
Your advisor can help estimate expenses: tuition and fees for favorite schools; room and board; books, computers, and instructional fees; and personal expenses. Don’t forget transportation for weekends and holidays at home.
Choose an Account
Discuss the pros and cons of the following savings accounts with your advisor:
- 529 College Plan
- Roth IRA
- Savings Bonds
- Custodial Accounts
- Education Savings Accounts
Involve Your Student
Based on your family’s scenario, your student can get involved in budgeting for college by working part time, applying for scholarships, and planning to take AP or other transferable credits at a lower cost. Start early!
