Wealthport (Pty) Ltd’s Post

We have made it to December and there are still a lot of questions: 1) Will the Fed continue with rate cuts in December and into 2025? 2) Have financial institutions seen the worst of the CRE market or is the worst yet to come? 3) How will the new administration's policy effect, CRE and Business Lending? 4) How will the new administration deal with inflation, trade and monetary policy? These are some of the major questions we all need to deal with in 2025. There are more specific issues, but I believe these are the questions that will affect financial institutions and their clients, big and small. The answers and the implementation will determine profitability and ongoing stability of the financial markets and your institution. Braun is here to help you through collaboration, valuation and liquidation. We look forward to working with you in 2025. Contact us now so we can get a head start on a better 2025.

Congratulations to George Salinas, CFP®, CFS®, CRPC™ for being published in Business Insider for providing insightful comments on CDs, bonds, and high-yield savings accounts and why investors should consider them. Titled “The Fed’s rate cut could be the end of banks paying 5% for your savings. Financial planners explain how to lock in rates now.” by Sophia Acevedo, here’s the link to the entire text: https://lnkd.in/gEAzKCit

While enjoying today's high tide in the money markets, state and local treasurers must also prepare for potential stormy weather ahead. The latest inflation data has caused market ripples, and with yields on the rise, it's important to stay ahead. This insightful article from Girard Miller explores how public cash managers can make the most of current conditions while advocating for expanded federal insurance for public deposits. https://lnkd.in/eb5m9FZQ #PublicFinance #CashManagement #TreasuryManagement #FinancialPlanning

Key metrics I like to track in a client's financial plan: - Savings rate (with and without debt repayment) - Cash reserve - Liquidity reserve - Vested stock concentration % - Unvested stock concentration % - Effective Tax Rate - Marginal Tax Rate (room until next bracket) - 25x current annual living expenses

The chart of the week examines the projected Federal Funds rate for the next two years and the difference of pre and post-Jackson Hole meetings. There has been much discussion about interest rates and the potential impact of rate cuts on money markets and “T-Bill and Chill,” but this chart should provide more clarity. Based on current expectations, it is projected that by December 2025, the Federal Funds rate could reach around 3% and potentially dip into the 2% range. As we have previously emphasized, it’s important to have a plan in place if you have a significant allocation to cash, money markets, or short-term bonds. #interestrates #theFED

Key metrics I like to track in a client's financial plan: - Savings rate (with and without debt repayment) - Cash reserve - Liquidity reserve - Vested stock concentration % - Unvested stock concentration % - Effective Tax Rate - Marginal Tax Rate (room until next bracket) - 25x current annual living expenses

💰 𝗙𝗶𝘅𝗲𝗱 𝗗𝗲𝗽𝗼𝘀𝗶𝘁𝘀 𝗮𝗿𝗲 𝗦𝘂𝗯𝗷𝗲𝗰𝘁𝗲𝗱 𝘁𝗼 𝗥𝗶𝘀𝗸. . . . Many believe that Fixed Deposits are a risk-free haven. 🤔 But they fail to understand that they come with their fair share of risks. 🚨 (Follow Pruthvi Ravindranath to understand these risks in detail in my future posts.) [1] Inflation Risk [2] Liquidity Risk [3] Taxation Risk [4] Interest rate Risk [5] Reinvestment Risk [6] Financial Plan Fitment Risk 𝗘𝘅𝗲𝗺𝗽𝗹𝗶𝗳𝘆𝗶𝗻𝗴 𝗲𝗳𝗳𝗲𝗰𝘁 𝗼𝗳 𝟮 𝗿𝗶𝘀𝗸𝘀: 𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻 𝗿𝗶𝘀𝗸 𝗮𝗻𝗱 𝗧𝗮𝘅𝗮𝘁𝗶𝗼𝗻 𝗿𝗶𝘀𝗸 Let's say you invest ₹1,00,000 in a fixed deposit at a 7% interest rate for 5 years. After accounting for inflation (6%) and taxation (30% tax bracket), the real returns diminish significantly. 💰 After 5 years: Nominal Returns: ₹1,40,249 Real Returns (adjusted for 6% inflation): ₹1,04,802 Returns after 30% taxation: ₹73,361 The real rate of return on a fixed deposit is -1.04% (negative). The bottom line is to limit your exposure to fixed deposits. Asset allocation is the key to building a robust portfolio. Have you evaluated the risks associated with your fixed deposit investments? #fixeddeposits #AssetAllocation #WealthBuilding #prosperwithpruthvi Want to know how much to park in FDs to optimize your wealth journey? DM me for personalized insights.

Guaranteed Repo can help support the smooth functioning of the U.S. Treasury cash and repo markets. As this WSJ article points out, the issuance of U.S. Treasury securities has already grown substantially in the past few years, and the pace of issuance is likely to continue. At the same time, increased capital requirements are likely to constrain banks’ ability to act as intermediaries. And a host of other regulations such as the SEC’s clearing requirement are likely to increase costs. The result of these pressures is likely to be lower liquidity. Guaranteed Repo is a complement and alternative to clearing that holds significant potential to help banks retain their crucial intermediary role in repo markets (which in turn will support the cash market). It results in lower costs and RWAs than any other secured funding model and eliminates balance sheet constraints imposed by the [supplementary] leverage ratio. It also halves system-wide leverage and reduces banking system risk compared to clearing. These features are likely to help maintain and expand liquidity. Guaranteed Repo not only incorporates the benefits regulators hope to achieve from expanded clearing requirements, it achieves benefits clearing does not. Guaranteed Repo is a global solution that can be adopted with minimal effort. Please see Shiv Rao and SUNTHAY for more details. https://lnkd.in/e9bJZUxw

The Federal Reserve's widely anticipated rate cut happened yesterday—and while it's good news in the fight against inflation, there will be both winners and losers once its impacts start hitting financial markets. Here's a few examples: * Consumers with big credit card debt stand to gain the most from a rate cut, especially those with variable rates. But with average credit card interest rates sitting at well over 20%, a 0.5% drop is unlikely to make a big difference. * Like credit cards, auto loan rates follow the federal funds rate closely, meaning car loan costs rise quickly when the Fed raises rates. However, when the Fed lowers rates, the relief for borrowers is slower and less noticeable, making rate hikes more immediately impactful than rate cuts. * Homeowners looking to refinance may benefit from the rate cut, but they need to pay close attention to any additional costs that may cancel out potential savings in interest, such as closing costs. * When the Fed cuts rates, your savings account interest will likely follow—just not as quickly. That means your money won’t grow as fast, so now’s the time to rethink your savings strategy. Read more on how the Fed's rate cut will impact consumer finances, via Natalie Campisi on Forbes Advisor here: https://lnkd.in/ewAWMVJa #federalreserve #economy #personalfinance

While May brings flowers, I bring you a new roundup of finance articles to help you stay informed. In the banking sector, smaller banks are at higher risk due to their exposure to Commercial Real Estate (CRE) loans. Larger banks, with lower exposure, aren't immune either. If smaller banks fail, it can impact the entire financial ecosystem. I also explore how merging Treasury and Federal Reserve functions could lead to persistent inflation, reducing bond attractiveness but potentially benefiting commodities. Visit our website for more updates: https://bit.ly/3HE0BB1