From sequestration to our tax forms, most of us don’t really understand what’s going on. Investors tend to inquire more and the following is a look at what some of you have asked to have explained this week.
Banks have been scrutinized once more for possible manipulation of LIBOR and here’s why you should care.
LIBOR stands for the London Interbank Offered Rate.
“You might feel that sometimes the bank doesn’ trust you. Well, if you think that’s bad, get this: Sometimes they don’t even trust each other.
We can measure trust (or lack thereof) by looking at the interest rates banks charge each other for short-term unsecured loans.” ~Simon Constable, R. Wright
This rate often forms the foundation for rates on adjustable mortgages. The impact of this leading indicator is very important to consumers and businesses. Your can find it daily from sources such as The Wall Street Journal. Increases mean the economy is heating up.
Investors often compare portfolio performance to that of the S&P 500. Here are a few things you may not know about this popular index.
1) It’s one of many used as a benchmark and may not be invested directy into.
2) Chosen by committee with certain criteria such as size, sector and length of time traded on an exchange.
3) Non-U.S. companies have been included.
4) As of 2/2013, the Consumer Discretionary sector comprised largest portion of index at about 16% with Telecommunication services comprising about 3%.
What you don’t know can hurt you. The world of investing and finance has a language of its own and, as recovery from recession continues, it’s important to stay mindful of the need to know. . .
Know how your mortgage rate is calculated.
Know how your investment manager judges performance.
Know when to seek advice.
Until next week,
Susan R. Linkous