January 14, 2025

Please Watch for Your 2024 Tax Organizer, Arriving Soon

Tax season is ramping up, and we’re here to make everything go as smoothly as possible. Please watch your inbox for your tax organizer packet, which should arrive by the end of the month. Using the organizer should help ensure we have all the information needed to prepare your tax return promptly and correctly. If you have any questions, please reach out to your advisor or call our main number: (203) 967‑2231. Thank you for trusting us to service your tax needs!

TDG News: Welcome, Alexis!

Please extend a warm welcome to Alexis Ramos, our new Tax Associate!

Alexis graduated from the University of Bridgeport with a BA in Accounting in 2017. After graduating, she moved to Florida where she worked as a tax associate at a small firm until deciding to return to Connecticut. Alexis worked at Marcum LLP in the Family Office and Wealth Services Division as a tax associate from 2019 to 2022. She was responsible for tax compliance and reporting for high net worth clients with complex tax and accounting needs. During this time, she was also pursing her MS in Taxation at the University of New Haven, obtaining it in May 2022. During 2022, Alexis decided to broaden her horizons and explore the Private Equity industry, working as a fund accountant for a large firm out of NYC. After two years, Alexis found that she felt no sense of passion for the Private Equity industry. Recognizing this lead her back to a career more aligned with her interests—and we’re glad to welcome her to The Dowling Group.

In her free time, Alexis enjoys running, reading up on anything health and fitness related, traveling, and spending time with her loved ones.

The Markets

Bond yields are rising—and they have investors’ attention.

Last year, the United States Federal Reserve (Fed) lowered the federal funds rate by one percent. (The federal funds rate is the interest rate the Fed charges banks. It influences other interest rates.) This shift in Fed policy made a lot of people happy.

• Companies, business owners, and consumers cheered because Fed rate cuts typically lower borrowing costs. As a result, rates on business loans, home equity loans, auto loans and credit cards tend to move lower.
• Stock investors were enthusiastic because lower borrowing costs can reduce companies’ expenses and increase profits, and that can lift stock prices higher. Since the stock market moves in anticipation of future events, rate cut expectations are already reflected in many companies’ stock prices.
• Prospective homebuyers were optimistic. Fixed mortgage rates are linked to the yield of the 10-year U.S. Treasury note, and they hoped it might also move lower.

Bondholders were more skeptical. Even as the Fed was cutting the federal funds rate, yields on longer maturities of U.S. government bonds were moving higher—not lower. One reason is that economic data—including last week’s strong jobs report—continue to confirm that economic growth and inflation are exceeding expectations. As a result, the Fed may be inclined toward fewer rate cuts in 2025.

“For stocks, higher bond yields imply no increase in price/earnings ratios and possibly some contraction from current levels,” reported Randall W. Forsyth of Barron’s. Changing expectations for Fed actions and company performance is likely to shift analysts’ outlook for stock market performance.

There is a second reason for the divergence in Fed actions and government bond yields, according to economist Mohamed El-Erian, a columnist for Bloomberg. He explained that key government bond yields in advanced economies “are widely regarded as the most accurate gauge of the economic outlook, including growth, inflation and central bank policies.” In his opinion, “Yield increases show that investors are closely watching whether advanced economies have the ability to deal with high debt and rising borrowing costs.”

Last week, major U.S. stock indices moved lower, and yields on longer maturities of U.S. Treasuries continued to rise.

Data as of 1/10/25	1-Week	Y-T-D	1-Year	3-Year	5-Year	10-Year
Standard & Poor's 500 Index	-1.9%	0.9%	21.8%	7.7%	12.3%	11.1%
Dow Jones Global ex-U.S. Index	-1.1	-1.3	3.5	-2.0	1.3	2.5
10-year Treasury Note (yield only)	4.8	N/A	4.0	1.8	1.8	1.9
Gold (per ounce)	1.5	2.9	32.4	14.4	11.6	8.2
Bloomberg Commodity Index	4.1	3.8	5.1	0.5	4.9	0.1

How Much Do You Know?

Last year, Pew Research asked adults across the United States how much they knew about personal finance, a topic that includes “managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, and retirement, tax, and estate planning,” reported Will Kenton of Investopedia.

More than half (54 percent) of those who participated in the survey said they knew a great deal or a fair amount about personal finance. However, the results varied widely depending on the demographic attributes considered. For example, knowledge about money appears to increase with age, reported Khadijah Edwards of Pew Research Center. For example:

• Ages 18 to 29: 41% know at least a fair amount
• Ages 30 to 49: 47% know at least a fair amount
• Ages 50 to 64: 60% know at least a fair amount
• Ages 65 and older: 67% know at least a fair amount

Extrapolating that result suggests that about two-thirds of Americans may know a fair amount about personal finance as they approach retirement. Many survey participants learned what they knew about money from family and friends. Others said they relied on:

• The internet,
• A college or university course,
• Media (news, documentaries, and books), and
• Elementary or high school classes.

When asked about various issues related to finances, respondents were more confident in their ability to accomplish some tasks than others. For example, participants were confident they could:

• Find their credit report: 75%
• Make a monthly budget: 59%
• Develop a plan to pay off debt: 57%
• Create a plan to save money: 56%
• Build an investment plan to grow wealth: 27%

If you have friends or family members who would benefit from knowing more about how to manage, save, and invest money, gifting a subscription to a personal finance publication could make a difference. You’re also welcome to share our contact information. We help people pursue their financial goals.

Weekly Focus – Think About It

“Real knowledge is to know the extent of one’s ignorance.”

—Confucius, philosopher

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

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