Friday Financial Five – February 5, 2016

Friday, February 05, 2016

Dan Forbes, GoLocalPDX Contributor

Interest rates fall again

The Fed hike at end of 2015 was widely considered the starting point for interest rates to head in an upward trajectory but that has not been the case. Rates have fallen for five straight weeks and Zillow reports that the average 30-year mortgage quoted on its website dropped to 3.5%, a rate that hasn’t been seen since 2013. The 15-year mortgage is also heading down, touching 2.75%. The falling rates haven’t produced more mortgage applications during these winter months, as the Mortgage Bankers Association reported a seven percent for purchases.

Presidents and S&P 500 results

It’s popular to make the connection of market returns with the political party holding presidential office. As it pertains to the S&P 500, returns have been higher under Democratic Presidents since 1945, with an average annual return of 9.7% vs. 6.7% under Republican presidents. Gerald Ford, a Republican, had the best overall performance with an 18.6% annual average from 1974-1977. He was elected after Nixon’s resignation, and the economy was positioned for expansion after a spike in oil prices and recession. The second best market performance was under Democrat Bill Clinton, averaging 14.9% thanks largely to the technology boom. President Obama is currently positioned to have the second best track record (behind Clinton), although recent volatility could threaten that.

Cybercrime costs estimated at $450 billion

The ability of government bodies to police crime over the internet without violating privacy laws has always been a hot button issue. The cost of cybercrime is rising, with Hamilton Place Strategies estimating the total global cost at almost half a trillion dollars. In 2014, it’s reported that there were over 85 million data breaches in the U.S., making the prevention of cyber-crime number one on the agenda of CEOs for the country’s top companies.

Navigating college financial aid for divorced couples

College financial aid applications for remarried divorcees can present pitfalls, including the need to list full financial information for both households. The FAFSA (Free Application for Federal Student Aid) should focus on the custodial parent, or whomever the child spent the majority of time with over a 365-day period. The federal government doesn’t require information on the non-custodial parent, but they do inquire about child support received by custodial parent. At many private schools, the non-custodial parent will provide financial information, affecting the school’s aid but not federal aid.

Census Bureau commemorates 50 years of Super Bowls

Super Bowl weekend means big money and 2016 is no different as a 30 second advertisement will cost $5 million. This differs from the first Super Bowl in 1967, where the same spot cost $42,000. In honor of the game, the U.S. Census Bureau released interesting figures depicting changes since the first Super Bowl was played. World population has grown from 3.5 billion to 7.3 billion. The median sale price of a single family home has risen from $22,700 to $282,800 and the price of regular gas is up from 33 cents to $1.83 per gallon.

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].