Financial Blog Posts

Financial Blog Posts

Market Viewpoints – Spring 2022

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager
Both stocks and bonds struggled in the first quarter this year due to a more aggressive Fed posture, inflation risks continuing to increase, and the Russian invasion of Ukraine.

The US stock market experienced its first correction in almost two years as the Fed has steadily been increasing their rate hike expectations and discussing reducing their balance sheet as the year has progressed to try to slow down inflation, while the geopolitical risks from the war in Ukraine have only added further upside inflation risks.

The stock market began to improve throughout March, but still finished the quarter in negative territory. The bond market struggled in the first quarter with rate hike expectations increasing in a meaningful way with the Fed’s dot plot showing the potential for nine rate hikes this year.

At the beginning of the year, only three Fed rate hikes were projected by the Fed. This more aggressive Fed posturing has the market on high alert for a possible Fed policy mistake in the future if they were to overtighten causing a considerable slowdown in the economy.

Inflation continues to be the largest risk to the economy this year with a large supply and demand imbalance in many areas of the economy. The supply chain began to improve slightly early in the year prior to the Russian invasion of Ukraine. However, commodity prices including oil, natural gas, wheat and other commodities have increased due to the impact on supplies produced from both Russia and Ukraine further adding to the supply chain imbalances and adding upside pressure to energy costs throughout the globe, especially in Europe due to their large reliance on Russian oil and natural gas.

The Fed has taken a more aggressive posture to raise interest rates faster and begin to reduce their balance sheet this year, in an effort to slow the economy and stop inflation from becoming entrenched. It is too early to tell if the Fed will be successful in the efforts to slow inflation without causing too much of a meaningful slowdown in the economy.

The US is more insulated than Europe in terms of energy production so the US economy should be less impacted by inflated oil and gas prices. US GDP is projected to remain above trend this year; however, expectations have come down somewhat from the beginning of the year as inflation pressures begin to weigh on earnings expectations and consumer spending.

US companies have continued to show resilience in being able to pass along their increased input costs on to the consumer so earnings have continued to remain strong.

We will continue to monitor consumer spending throughout the year to determine if price increases begin to have a meaningful impact, which in turn will weigh on company earnings, especially companies that operate in the consumer discretionary sector.
US consumers have continued to show resilience in spending behavior in the face of higher costs, however the more entrenched inflation becomes, the higher the probability that consumer behaviors will eventually shift to a more cautious approach. The Fed has a difficult job ahead to try to rein in inflation, but not overtighten economic conditions to cause the economy to slow down too much.

While many positives remain for the global economy with global economic growth and company earnings expected to continue to remain positive in 2022, we maintain our view to be mindful of the risks that the markets face this year from a more aggressive Federal Reserve, elevated inflation, continued supply chain issues, and many different geo-political risks.

We recommend staying the course with your investment objectives, and we continue to rebalance and take profits as we see opportunities to protect portfolio gains and keep our portfolios in line with their investment objectives.

We also recommend communicating with us if any short-term cash needs arise so we can look for opportunities to be proactive when raising cash for any necessary distributions helping to protect against possible short-term negative moves in the market.

We recommend maintaining a more long-term focus on investment goals and objectives with an understanding that short-term headline risks rarely have a long-term effect on markets.

The Time to Review Your Life Insurance Is Now

Olsen Financial Spotlight

By Patrick Olsen, Special Care Planner / Financial Services Professional

Olsen Financial Logo

Life changes and priorities have a way of shifting. But one thing stays the same: how important family is and our desire to protect them. That’s why reviewing your life insurance is an important financial decision.

It means your loved ones could be OK financially if something happened to you. Ensuring the financial security of the people who matter most to you is an important responsibility. This means protecting the value of what you provide for them on a day-to-day basis. You don’t have to wait for a big life moment to review this important protection.

The time to review your life insurance is now.

Olsen Financial is a partner of Northwest Bank’s Investment Management Group. To schedule an appointment with Pat, please contact our Investment Management Group at 563.388.2628.

Reaching Your Retirement Goals Despite Volatility

During times of market stress when stock prices fluctuate up and down significantly, it’s normal to worry about your retirement investments. The good news is that you have likely planned for uncertainty and invested in a diversified mix of stocks and bonds which will help your retirement portfolio weather market volatility.

The most prudent action during unpredictable times like these is to remain focused on the long term objective of reaching your retirement goals and consider the potential impact each of these investor reactions can have on your portfolio.

Investor Reactions During Market Volatility

Flight to Safety

Some investors are not comfortable when the market experiences significant downturns – they feel the urge to sell their investments and exit the market.

CAUTION: If you sell out at these times, you will lock in your losses and not be able to participate as the market recovers. Instead, stay the course and let your portfolio work for you as the market becomes more stable. Typically the market ups and downs are temporary and stability eventually resumes. What’s more, historically the markets have moved on to reach even greater highs.

Stay the Course

You have invested and planned for long-term retirement goals and need to stay focused on that long-term timeframe instead of reacting to short-term market events. Stay the course and let your retirement portfolio work for you to meet your retirement goals.

Make the Most of It

In times of market stress it is a prudent decision to rebalance your investment portfolio to the target strategy. This process includes selling a portion of the positions that have held up the best during the recent market volatility and buying into the positions that have been oversold. For those of our clients that have enlisted our investment management services, this is the process that we manage for you. We will ensure your portfolio is rebalanced and aligned with the investment strategy we worked with you to create.

Portfolio Impact of Investor Actions

portfolio impact of investor actions

It’s Time in the Market – Not Timing the Market

Market volatility is inevitable, but panicking can be a costly mistake. Selling when stock prices have declined and then buying back in after the markets rebound and stock prices have moved higher simply doesn’t make sense—especially for long-term investors. But unfortunately, this is exactly what happens when investors let emotions influence their decisions.

Missing even just a few of the best days of returns can materially impact your portfolio’s performance as history reveals that after periods of volatility, the stock market has not only recovered—but moved on to reach new highs.

A well-diversified, professionally managed investment plan can help ensure your assets are positioned to weather the market’s ups and downs and provide you with the fortitude to stick to your investment plan.

Hypothetical Growth of $10,000 Invested in the S&P 500 (December 1979 - December 2021)

Hypothetical growth of $10000

In the Community – Ridgecrest Village

Our Non-Profit Community Spotlight

Ridgecrest Village

Ridgecrest Village logo

Ridgecrest Village has been a proud provider of senior services for the Quad Cites for over 50 years! As the leader in retirement communities, Ridgecrest Village has flourished over the years. We look forward to continuing to support our residents and staff to live purposefully and passionately.

We also want our residents to live their lives as worry free as possible. Our unique option of Lifecare offers our residents peace of mind when it comes to the future costs of their potential healthcare needs. When residents choose this option, they are able to control those costs and this can allow them to preserve their assets for their family.

Ridgecrest Village is driven not only by our mission and values, but also has the help of trusted partners. Similar to how we become this partner with residents and their families as they plan for their future, Ridgecrest Village looks to the Investment Management Group to guide us. IMG brings a lot of value to our organization by providing solid advice and performance that is beneficial to our operation, and providing a better living community for our residents.

Another of our trusted partners is our own Ridgecrest Village Foundation. With the help of the foundation’s work, we are able to sustain some valuable programs. One plan includes a nursing scholarship program to help individuals cover the costs as they further their education. Another program is our Koning Charitable Fund. This fund can provide resources for those that have been living at Ridgecrest over the years and find they may need financial assistance. This is just one more example of how we try to give our residents peace of mind.

Ridgecrest Village truly is a village of its own. We provide all levels of care from Independent Living to Assisted Living to 24 hour care to end of life care. You can find it all right here in one place. For more information about Ridgecrest Village call 563.391.3430 and ask for Karen McCoy or visit ridgecrestvillage.org. We hope to see you soon and to be able to say “Welcome Home”!

Upcoming Events from our Nonprofit Partners

Framed: Step into Art | Open until May 1 | Family Museum
Step inside the framework of famous paintings and experience art with your kids and family in this interactive exhibition.

Pollination Investigation | Open now | Putnam Museum & Science Center
Nearly 90% of flowering plants rely on about 200,000 species of animal pollinators for fertilization. Explore the essential role that pollinators play in the natural world in this Smithsonian poster exhibition.

Spring Parent Learning Series | Beginning May 4 | The Arc of the Quad Cities
The Arc of the QC is hosting a series of workshops focused on providing the tools parents of children with intellectual and developmental disabilities need to be the most effective. All sessions are free.
Visit www.arcqca.org for information.

2022 Mental Health for Healthy Living Conference | May 6 | Vera French
Vera French is hosting a conference on mental health featuring Chris McCormick-Pries, ARNP and John Medina, PHD. To register, go to forms.office.com/r/2grWjJdQwC.

HANDS Auxiliary Golf Outing| June 6 at Crow Valley Golf Club | Handicapped Development Center
Enjoy a day of golf and free admission to the cocktail party/auction for you and a guest in support of HDC. Contact Mary Egger at 563-391-4834 or maryegger@hdcmail.org to register today.

Proud to Be QC: Isabel Bloom

Isabel Bloom

Northwest Bank & Trust Company is #ProudToBeQC, and we’re highlighting a few reasons why! Join us as we take a close-up look at local businesses built by creative, talented, and driven Quad Cities entrepreneurs.

This episode features the QC-based studio and shop founded by Isabel Bloom over 60 years ago. We sit down with Donna Young, co-owner and sculptor of Isabel Bloom, to chat about how this established brand has evolved to meet today’s trends in beautiful home and garden décor while remaining true to their signature sculpture style. Visit www.ibloom.com to shop online or in store at 736 Federal Street in Davenport.

We want to thank our customers and partners for putting their trust in us for their banking needs. Northwest Bank and other community banks like ours are only successful if our customers and communities are, too. We are focused on building a more sustainable, vibrant economy here in our hometown and recognizing all the community members, employees, and businesses who make us Proud to Be QC.

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Financial Literacy is Key to Effective Money Management for Teens

April is Financial Literacy Month, and we want to encourage our customers and community members to take control of their financial future by learning fiscally responsible habits and putting these lessons into practice. Regardless of life stage, age, or income level, having strong financial principles and sound money management practices can help you avoid financial missteps and position you for greater success. We also think it is crucial for young adults to develop these skills early on in life, so they can set out on the right path with their banking and credit habits.

Former Federal Reserve Chairman Alan Greenspan once stated, “Financial education is a process that should begin at an early age and continue throughout life. This cumulative process builds the skills necessary for making critical financial decisions.”

At Northwest Bank & Trust Company, we understand the importance of helping our community’s youth build a strong financial foundation so that they better understand basic concepts like budgeting, simple interest, and establishing and maintaining good credit.

According to the Council for Economic Education’s 2020 Survey of the States only 21 states in the U.S. require high school students to take a course in personal finance. While this denotes a marked improvement since CEE’s first survey in 1998, there remains a sizeable financial education knowledge gap.

Northwest Bank believes that financial capability education, improves the financial health outlook for our youth and better prepares them to tackle unexpected financial situations or prepare for significant life milestones like paying for college, purchasing a home, opening a business, or building a nest egg.

We offer the following tips for Gen Z and their parents to shore up money management skills and prepare for the post-graduate workforce:

Set SMART (Specific Measurable Attainable Realistic Trackable) goals.

  • Choose your priorities—whether it’s saving for a computer or building an emergency fund—and make sure they are achievable. Create a plan of action and measure your progress over time.

Start a savings account (if you don’t have one already).

  • Northwest Bank offers automatic transfer services to move a set amount from your checking account to savings monthly.

For working-age students, consider part-time or seasonal employment.

You will learn more about personal responsibility and have an opportunity to manage expenses.

Track your spending and avoid making impulse purchases.

  • Create a budget and review it periodically to make necessary adjustments.

Gain perspective about risk and reward.

  • Knowing how stocks, bonds and mutual funds can affect an investment portfolio shows you how financial decisions can grow—or shrink—your savings. 

Learn about credit scores

  • Credit scores are a representation of your financial past, present, and future. We can offer tips to help you establish and maintain good credit.

Having the knowledge about how to best manage your money is just the start. When young adults practice proper money management techniques early, they’re more inclined to make effective financial decisions throughout life. The sooner your children start to grasp these concepts, the more apt they’ll be for a better financial future. 

Source: Independent Community Bankers of America

Proud to Be QC: Me & Billy

Me & Billy

Northwest Bank & Trust Company is #ProudToBeQC, and we’re highlighting a few reasons why! Join us as we take a close-up look at local businesses built by creative, talented, and driven Quad Cities entrepreneurs.

This episode features Me & Billy, a Quad Cities restaurant and bar located in downtown Davenport. We sit down with Bill Collins, owner and “mascot,” to talk about the restaurant’s success and how this family business has become a QC staple that keeps locals and visitors coming back! Visit Me & Billy online at www.meandbilly.com or in person at 200 W. Third Street in Davenport.

We want to thank our customers and partners for putting their trust in us for their banking needs. Northwest Bank and other community banks like ours are only successful if our customers and communities are, too. We are focused on building a more sustainable, vibrant economy here in our hometown and recognizing all the community members, employees, and businesses who make us Proud to Be QC.

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Northwest Bank is Proud To Be QC

Reinvesting in the Community We Love

Proud to Be QCThe idea of “sustainability” is linked to a lot of local activities these days—whether it’s reusing or recycling products, sampling culinary delights from a local bakery, or choosing to buy American-made products to support our national economy. There are plenty of reasons why eating, dining, and banking locally makes good economic sense.

If you’ve ever wondered if it matters where you deposit your hard-earned money, let us assure you it does. Not only does banking locally support small businesses (community banks fund more than 60% of small business loans and more than 80% of ag loans), but as locally owned and operated businesses themselves, they are part of the economic engines that create 62 percent of new jobs annually.

Community banks like Northwest Bank & Trust Company take in deposits and distribute loans that feed into a self-sustaining micro-economy and keep funds right here in the Quad Cities. It is all part of a symbiotic relationship that community banks have with their communities. And the proceeds from those businesses employ residents, fund municipalities, and continue the cycle of locally based economic growth.

And if you need more proof just consider the community bank response to the coronavirus pandemic.

  • Community banks, as economic first responders, made 60 percent of total Paycheck Protection Program loans to small businesses and provided 72 percent of PPP loans to minority business owners that reported such data.
  • Community banks outpace large banks in their average number of banks operating in both rural and urban markets by a 3:1 ratio.
  • Community banks are preferred small business lenders, with an 81 percent net satisfaction score compared to 68 percent for large banks and just 43 percent for online lenders.
  • Community banks have consistently demonstrated their safety and soundness with higher capital ratios and better loan quality than the largest institutions.
  • Community banks operate in areas abandoned by others—serving as the only physical banking presence in nearly one in three U.S. counties.

But it is not just about stats. When customers contact Northwest Bank, they are greeted by a talented team member who is attuned to their needs and empowered to act on their behalf. And when our employees participate in annual donation drives for United Way or when Northwest Bank contributes thousands of dollars every month to local organizations, we are working toward our goal to ensure economic prosperity for the Quad Cities community we call home. 

Even more, we are extremely proud to be a part of such a thriving, creative, and hard-working community. Our people are arguably some of the best you’ll find and our small business owners are talented and driven. In the next several months we look forward to highlighting a few of them! Stay tuned for our new #ProudToBeQC series, where we’ll take an up-close look at some local businesses right here in the Quad Cities.

We want to thank our customers and partners for putting their trust in us for their banking needs. For our neighbors who may be considering a switch, we implore you to take a closer look at Northwest Bank & Trust Company to discover how we can help you realize your financial dreams. Our pledge is to never lose sight of the all-important “relationship” and the personalized service our customers expect.

Remember, we are all in this together. Northwest Bank and other community banks like ours are only successful if our customers and communities are, too. That is why community banks and our relationship business model have thrived for more than 150 years. We know what it takes to create successful local economies. Join us in helping to build a more sustainable, vibrant economy here in our hometown and recognizing all the community members, employees, and businesses who make us Proud to Be QC.

Developing and Maintaining Good Credit Habits

Northwest Bank & Trust Company is encouraging customers to plan for their financial future by establishing and maintaining good credit habits to create a blueprint for financial wellness and prosperity in the New Year.

Good credit is essential to a strong financial foundation, so it’s important to build and maintain responsible credit practices that demonstrates sound money management principles to help you achieve your short and long-term financial goals. By working with your trusted community banker at Northwest Bank to create a budget that reflects your finances and lifestyle, you can better manage your spending and savings behavior to reach your goals and avoid financial setbacks.

We offer the following tips to help consumers build and maintain good credit.

Open a checking account.

Once you open your account, keep careful track of your balance to help establish a credit history.

Use debit and credit cards for convenience and safety.

Be careful not to overspend and avoid missed or late payments, which can damage your credit and hurt your credit score.

Develop a good mix of credit.

A good credit mix could be a revolving credit line and an installment loan, for example. This will boost your credit score and demonstrate that you can manage different types of credit.

Show stability.

In the three to six months before a major purchase, show credit stability. Avoid opening or closing accounts or moving large amounts of money around.

Build an emergency fund.

Your emergency fund should be equal to at least six months of living expenses. Establishing a financial cushion to help absorb unexpected expenses and avoid penalties and fees for missed or late payments.

Alter your credit focus as you approach different life stages.

While Gen Z might be saving for a down payment, a Gen Xers or baby boomers may be paying down debt to plan for retirement, respectively.

Monitor your credit regularly.

Keeping an eye on your credit score can help you correct any errors and detect potential signs of identity theft. Order a copy of your credit report annually from annualcreditreport.com.

By establishing good spending and saving habits early you can retain your financial footing and more quickly recover from temporary financial roadblocks. Reach out to your local banker at Northwest Bank & Trust Company who can offer sound financial advice to help you navigate life’s financial milestones and plan for your future.

Source: Independent Community Bankers of America