🍽️ Sell in May and go away

Hey Future Funders Family,

Happy Monday, we hope you had a great weekend!

This week we are launching our ongoing referral program: for any two successful referrals, you will receive the e-book and audio versions of our first children's book, Sadie Builds a Business, as our gift to help spark some conversations with your kids around money, entrepreneurship and investing. (While our book is for kids age 10 and under, you can check out our more age specific book recommendations here).

Ok, let's get to it!

💬 Quote Of The Week

📰 Headlines That Matter

Investing

Sell In May And Go Away

🚀 The quick version: The S&P 500 index is up about 9% year to date, but we continue to get constant mixed signals from companies on the state of the economy. This past week was no different as the health of the US consumer right now is starting to become more of a question mark.

The reason is due to the earnings results of three big consumer companies: Home Depot, Target, and Walmart. The former two (Home Depot and Target) were very cautious on the future of the economy as they said customers were spending less money and definitely more hesitant. Walmart, on the other hand, sounded confident that their customers were still spending, but did note they were being a bit more picky on price.

These constant mixed signals are not new and it got us thinking about the famous investing adage: sell in May and go away. This saying points to a view, with some historical accuracy, that the stock market tends to rise more in the six months from November to April than it does from May to October. 

👪 How it affects your family: While each year is different and we would say that being in the market for the long term is the best way to go, amid these uncertain times there are some technical factors that any family should at least know about if they want to make shorter term decisions.

One of these technical factors to consider is something called the Relative Strength Index (RSI). The RSI measures how many people are buying or selling a stock on a relative basis. If a lot of people are buying at any given moment, it means that a stock may be "overbought" (meaning that too many people have bought in a short period of time and there may not be anyone left to buy). The reverse is also true if a lot of people are selling at any given moment which may indicate the stock is "oversold."

The RSI for any stock is measured on a scale of 0 to 100 with a score of 70 or higher meaning a stock is overbought and a score of 30 or lower meaning a stock is oversold.

For those wondering, there is also an overall RSI for the market you can track (the current RSI for the S&P 500 is 60 meaning using this method people would say there may not be much more near term upside in the market).

Here are some more resources on the stock market to help the family and teach the kids:

• Some safe investments without having to play the stock market (in last week's newsletter)

• What is a Treasury ladder? Let's discuss

• What is an I Bond? Let's talk

• The stock market and Interest rates: explain it like i'm 5

Education

What You Need To Know Today About Student Loans And 529 Plans

For the short version, what you need to know is:

• Federal student loan rates as of July 1st will move higher to 5.50% (from 4.99%) in the 2022-2023 academic school year (this is the highest in a decade).

• Check today how your child's 529 plan is being invested. This dad was surprised to see his plan lose money in 2022 just as he went to try to use it.

👪 How it affects your family: You don't have to get us started on the ridiculous costs for college today (more on that here: is an Ivy League education worth the cost?), but both topics above are worth preparing for today.

With federal loan rates about to increase, every family needs a plan. All parents and college kids need to think critically about the Return on Investment (ROI) of their higher education.

One of the ways you can get the kids thinking this way is to create a budget around exactly how they will use every dollar of their student loan (you can have them use our free college loan budget template). Also, try to have discussions with them about the ROI of their education. If they are taking out $200k to go into a field where the expected starting career salary is $30k per year, they need to understand how long it will take to pay off the debt and maybe look at a smarter choice (a handy calculator by career).

On the second topic around knowing what your child's 529 plan is being invested in, we would suggest that you find that out... today. Our topic of focus this week (below) gives you an investing spectrum guide so that you can know what is consider a safe vs. aggressive investment; this can help you as you ask questions.

For a rule of thumb we would advise anyone with kids that are close to college have more assets in the safe buckets while any parent with a child still younger can be in more aggressive buckets.

Here are also a few more resources around 529 plans to help: 

• What is a 529 plan?

• Make your kid a millionaire for less than $1 per day

Dinner Table Discussion ❓

💡 In Other News...

🥛 A chocolate milk ban at schools is coming. The yummy drink we all remember fondly from childhood is on the chopping block in school cafeterias everywhere.

🎓How much money to give for graduation? With most graduations right around the corner, this will give you an idea of how much money people are gifting these days.

💵 Money tips that don't work. Not all personal finance tips are one size fits all. We loved this list of generic money tips that don't work for everyone: the common theme is money is just a tool that helps you live the life you want to live.

📺 Want a free TV? Telly is offering a free TV for people who sign up, with a catch (of course). TVs will begin shipping this summer.   

📱 Chat GPT now has an app. Just when we thought college kids couldn't get it any easier, there is now and app for that.

🚕 New Uber updates to know. Uber just rolled out a ton of new updates last week that will make parents of toddlers and teens rejoice.

🗓️ The Week Ahead

Week of May 22nd

This week we will get more information on how the US consumer is doing. We will hear company earnings reports from Autozone, Lowe's, and Dick's Sporting Goods on Tuesday as well as Costco and Ulta Beauty on Thursday.

May 23rd

Today is Lucky Penny Day! If your kids are younger, this can be a great opportunity to talk to them about money and money history (here is a free printable workbook to help). If they are older you can use it as a discussion around inflation and how a penny definitely does not buy what it used to!

May 24th

Today is National Brother's Day. If you have a brother in your life, go give him a wedgie.

🔍 Topic of Focus

Investing Series: Safe vs. Aggressive Investing Options

In our Topic of Focus this week we are introducing our Investing Series. Through this series will will explore various topics in the world of investing trying to give you practical tips that you can implement as well as teach the kids. This week we are going to talk about the spectrum of safe vs. aggressive investments to help you think broadly about allocation of the families investments.

Dinner Table Discussion ❓